Tag: fuel price hike

Fuel price hike was miscalculated

By Jason Woosey for IOL

The Department of Mineral Resources and Energy has apologised for miscalculating the December 2021 fuel price.

According to a statement released on Wednesday, the price of both grades of petrol will increase by 75 cents, instead of the 81 cents that was previously announced.

The department said the six cent difference was due to the fact that the wage adjustment for service station workers, which was already implemented in September, had been mistakenly added to the December fuel price calculation.

This minor adjustment will be of little or no consolation to motorists and commuters, with petrol still costing around 40% more than it did a year ago. With the adjustment taken into account, South Africans will pay R19.57 for a litre of 95 Unleaded at the coast and R20.29 in the inland regions, where 93 Unleaded will now cost R20.07.

“Although it is for the very first time that such an error has occurred in the history of basic fuel price determination in South Africa, the DMRE profusely apologises for the inconvenience caused. The rest of the fuel prices are correct,” the department said in a statement.

However, the Automobile Association has called upon the department to rectify the situation, given that the error has already caused many people to pay higher prices for fuel than they should have.

“The error by the DMRE validates the AA’s call that a total review of the fuel price, and an audit of all the process and components which comprise the fuel price, is necessary. While we appreciate that errors occur, the impact of the fuel price on millions of South Africans cannot be underestimated. This error, in fact, must be the catalyst for such a review,” the AA added.

As IOL reported on Tuesday, petrol prices have increased by 91.8% in the last 10 years and 60% in the past five. Diesel prices have surged by around 70% in the last decade.

The record fuel prices that South Africans are paying at the moment are due to a combination of a weak rand, strong oil prices and high taxes. Taxes currently account for R6.11 of every litre of fuel sold in SA and according to OUTA, the fuel levy has increased by 116% in the last decade.

 

Record fuel hike hits SA

By Jason Woosey for IOL

South African motorists and commuters are facing tough times ahead with record increases for both petrol and diesel set to kick in from Wednesday, 03 November.

According to the Automobile Association, petrol is set to rise by R1.21 per litre, while diesel will go up by a staggering R1.48 a litre and illuminating paraffin by R1.45.

This will inflate the price of a litre of 95 Unleaded petrol to R18.82 at the coast and R19.54 in the inland regions, where the slightly cheaper 93 Unleaded grade will now retail for R19.32. The wholesale price of 50ppm diesel will now amount to R16.63 at the coast and R17.23 inland, but keep in mind that the retail prices, which are unregulated and therefore vary from station to station, will be somewhat higher than that.

But how much more will South Africans pay per tank?

Putting 35 litres of 95 Unleaded into a compact hatchback with a 40 litre tank, such as a Volkswagen Polo or Hyundai i20, will cost an additional R42.35 at the coast (or R658.70 in total), while filling up with 93 Unleaded in Gauteng will now cost R676.20.

Putting 50 litres into a medium-sized car with a 55 litre tank, such as a Toyota Rav4 or Corolla Quest, will cost an additional R60.50, bringing the price of a tank to R941 for 95 ULP at the coast and R966 for 93 ULP inland.

A 75 litre diesel refuel in a bakkie such as a Toyota Hilux or Ford Ranger, or a large SUV like the Fortuner, will cost an additional R111, with the retail tank price differing, depending on where you fill up. Do shop around!

Why is fuel going up?

According to the AA, a “perfect storm” of demand imbalances is behind the record increases, including rand weakness, international oil prices and refinery costs. It also doesn’t help that fuel taxes currently account for at least R6.11 for every litre of fuel.

The cumulative effect of these increases is even more disastrous than the latest increases suggest. Consider that petrol is now around 40% more expensive than it was at the beginning of this year. With Brent Crude oil prices currently sitting at $84.71 per barrel and the rand trading at R15.37, there is little chance of any fuel price relief in the near future.

“The fuel price has a direct bearing on an already weak economy as it continues to drive up inflation on

essential consumer goods and affects every South African,” the AA said. “As we have said many times in the past, all the elements that comprise the fuel must be fully interrogated to determine if they are necessary. Given that the fuel prices are now at record highs, such a review is overdue”.

Source: IOL

Following a fuel price roller coaster in 2018, in which prices finally subsided meaningfully towards the end of the year, South African motorists can look forward to some price stability, at least for the next month.

According to the Automobile Association, the price of petrol is likely to increase by around eight cents a litre, while diesel is set to go down by three cents and illuminating petrol by nine cents. This prediction is based on late-month, unaudited data released by the Central Energy Fund.

This would push the price of a litre of 95 Unleaded petrol to R13.50 at the coast and R14.09 in Gauteng, with 93 Unleaded rising to R13.87 in the latter region.

While the rand has gradually appreciated against the US dollar in the past month, firming from around R14.50 to the dollar to current levels in the region of around R13.70, international crude oil prices edged higher, to hover around the $60 mark, although this is still well below the highs of around $84 recorded in October.

“What is worth noting is that the average rand strength against the US dollar has been increasing for nearly a month, and we are hopeful this may point to a period of greater stability for the currency,” the AA added.

“If international oil prices continue their current stable trend, South African fuel users may see fewer of the wild swings in fuel prices which characterised 2018.”

But don’t spend all those savings just yet. Last year showed us how volatile the fuel market can get.

Source: BusinessDay

South Africans must expect another substantial petrol price increase at the beginning of November‚ the Automobile Association (AA) says.

Commenting on unaudited mid-month fuel price data released by the Central Energy Fund‚ the AA said: “International oil prices remain stubbornly high and it is possible that current tensions involving Saudi Arabia‚ one of the world’s biggest oil producers‚ could place more pressure on fuel prices. More welcome news is that the rand is working in SA’s favour‚ and the recent firming of our currency against the dollar has taken some of the bite out of oil’s rally.”

“However‚ the potential price hikes are still daunting‚ especially for diesel users,” the AA said.

Petrol prices are currently set for a 40c a litre increase‚ while diesel and illuminating paraffin could spike 70c and 65c a litre, respectively‚ the AA said.

The association said the predicted increase in the price of petrol must‚ for the moment‚ be seen against the backdrop of the department of energy’s proposal to set a maximum price for the sale of 93 octane unleaded petrol (ULP) and lead-replacement petrol (LRP) fuels.

“Should this happen‚ it will allow fuel retailers to set their own prices below the maximum amount indicated by government‚ and may‚ depending on the margins‚ ease the burden on users of the two identified fuels. It must be stressed‚ however‚ that we did not participate in the drafting of the proposal‚ so details on its possible implementation remain unclear to us‚” the AA commented.

However‚ the association said it welcomed the government’s efforts to tackle rising fuel prices‚ and that the department of energy had requested input from industry stakeholders. It said the proposal looked to be consumer-friendly‚ and that the detail would clarify how this would work once all the feedback was received.

The AA said the country could not continue to be hammered by large fuel price hikes without severe economic knock-on effects. Earlier in October, the price of unleaded 93 petrol increased by 99c a litre‚ unleaded 95 by R1 and diesel by R1.24.

“The effect on bus and taxi operations could lead to fare hikes that exceed commuters’ ability to pay‚” the AA noted. “We again call on government to prioritise economic policies that inspire investor confidence. A stronger and more stable rand is the country’s only defence against the vagaries of the international oil price.”

SA faces ‘biggest ever’ fuel hike in October

By Tom Head for The South African

You might have heard a few horror stories about the petrol price in South Africa soaring by R1 for next month. Well, we’re here to tell you it all seems completely true.

The AA forecast a rise of R1.12 per litre of petrol, and a whopping increase of R1.38 for diesel in October – a devastating blow that has been described as “the biggest single hike” in our country’s history. But what’s fuelling this crisis, and why are costs spiralling so dramatically? We’ve got answers.

Oil prices are nearing $100 a barrel
There’s a very bleak outlook for oil prices on a global scale. This is by no means a consolation, but it goes some way to explaining why it’s getting ridiculous in South Africa. It’s not just internal factors that have ramped up the petrol price. Some commentators believe oil prices will hit a 10-year high of $100 a barrel soon.

Tension between the US and Iran
It’s hard to accept, but the world tends to revolve around America at this point. While President Trump is taking a more hostile approach to foreign policy, Iran has become one of his targets. Now, the country is one of the biggest exporters of oil in the world, but there’s trouble on the horizon.

The US government are set to impose further sanctions on Iran while pulling out of an agreement regarding a nuclear deal achieved by the Obama Administration. Production is already dropping in the Middle-Eastern country, and further financial turmoil will have a negative effect on oil costs.

Countries not producing the goods
Energy Minister Jeff Radebe has highlighted that Libya produced 1.5 million barrels of oil a day before the regime collapsed in 2011. That number is now almost at a third of what it used to be.

Venezuela’s current crisis also got a mention. They are a member of the Organization for Petroleum Exporting Countries (OPEC), but the oil industry has all but collapsed in the South American state. To put it in laymen’s terms, production is down and the cost has gone up.

A weak rand value to the dollar
It’s been a nightmare month for the rand, which has had to battle against the fierce knockout blow delivered by the recession. With the financial crisis coming as something of a surprise, the rand plummeted against the greenback and has struggled to find its feet ever since.

It soared above the R15 mark, and only recently came back down to R14.40. Most recently, Turkey’s currency tanked as a result of Trump’s intense import tariffs, aimed at stimulating industrial growth within the US.

In a global market, for every action, there is a reaction, and all emerging economies felt the knock-on effect of Turkey’s wobble.

Government subsidy backfires
Have you ever tried to help a situation but only gone and made things worse? Well, that’s effectively what happened to Jeff Radebe last month. The minister announced that the government would subsidise fuel costs for the month of September, meaning that an increase in the petrol price was smaller than forecast.

However, what were we just saying about actions and reactions? The slight relief felt this month will be compounded by the misery said to be coming our way next week.

For petrol prices to rise by a rand within a 30-day period is sharp, shocking rise. Had there been no government intervention, there’d be less of a knock-on effect. October’s rise could have been as “little” as 50 cents per litre, had South Africans been allowed to pay the full whack in September.

By Kaunda Selisho for The Citizen 

The nation will have to pull those belts a whole lot tighter with a projected increase of about R1.14 a litre of petrol.

There seems to be no end in sight for South Africa’s perpetual rise in fuel prices as the Central Energy Fund (CEF) has predicted yet another increase for the month of October.

The CEF report, released earlier this week, attributes the projected increase to a weaker rand and a higher international oil price.

The most recent hike was capped at 5c after government intervention but was dubbed a “once off” to provide citizens a short reprieve after sustained increases over five months in the lead-up to September.

According to the CEF’s calculations, early indicators estimate that the fuel price could rise by R1.14 a litre in October.

Fin24 calculated that the inland price of 95 octane petrol would rise to a possible record high of above R17 a litre, thus affecting food prices and transport costs.

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