Retreating oil prices have painted a rosier picture for South African fuel users than has been the case for much of 2019. This is according to the unaudited mid-month fuel price data released by the Central Energy Fund.
At this stage of the month, we are predicting a decrease of 91 cents/litre to the petrol to the petrol price, 70 cents to the diesel price, and 62 cents to illuminating paraffin.
The story of the month is definitely oil. Crude laboured above $70 a barrel for large portions of April and May, as the tug-of-war continued between the OPEC countries, which favour ongoing output restrictions, and the USA, where production is steaming ahead. There had been a remarkable drop in the price of oil since the end of May, with the commodity currently trading around $61 dollars a barrel.
South Africans are not getting full value though, thanks to Rand jitters in the wake of the ANC top leadership trading jibes over the future of the Reserve Bank. After a period of sustained price stability, the Rand weakened substantially against the US dollar, taking some of the shine off oil’s retreat.
The expected price drops are nonetheless substantial, with petrol showing a 91 cent-a-litre drop at month end, with reductions of 70 cents and 62 cents respectively for diesel and illuminating paraffin.
If stability returns to the Rand and oil settles at its lower level, there might yet be more good news in the pipeline. A lot will rely on politicians exercising restraint in their public statements. We urge government to decide on its economic policy clearly and unambiguously in private, before articulating it in public where investors are watching.
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: Supermarket & Retailer
Energy minister, Jeff Radebe, has announced that the proposal to cap the price of 93 octane petrol will be finalised by the end of January 2019.
Speaking in a parliamentary Q&A session on Wednesday (31 October), Radebe said that the proposal has been circulated to the fuel wholesale and retail industries which have been asked to comment on it, reports BusinessDay,
“We are very serious about changing and putting a cap on 93 octane,” said Radebe.
He added that the cap would go a long way in alleviating pressure on consumers.
The confirmation comes after Radebe announced that Government was considering fixing a maximum price for unleaded fuel at the start of October.
“Government is deeply concerned by the rising cost of petrol in South Africa which is largely caused by the rand-dollar exchange rate and the price of crude oil,” said Radebe at the time.
He added that a task team, including officials from the Department of Energy and the National Treasury, are examining what to do to cushion the blow of another increase as the international price of crude oil has kept increasing.
Radebe placed a hold on petrol price increases for the month of September, with only a five cents increase added as part of an ongoing wage agreement.
However, this was followed by a record increase in October as the price of 93 octane fuel increased by 99 cents per litre, while 95 octane was increased by another R1 at the pumps.
November is expected to provide a slight relief for owners of petrol vehicles, while the price of diesel is expected to see another large increase.
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.”
By Patsy Beangstrom for IOL
Residents can brace themselves for one of the highest fuel price increases as the cost of petrol smashes the R17 a litre mark from Wednesday.
Minister of Energy Jeff Radebe announced the adjustment of fuel prices for October on Monday.
Both grades of petrol, 93 and 95 (ULP & LRP), will increase by 99 cents and 100 cents a litre (c/* ) respectively from midnight on Tuesday night. This brings the overall retail price of 95 ULP for inland motorists to R17.08 c/* and R16.49 c/* at the coast.
The cost of diesel will go up by R1.24 a litre and illuminating paraffin (wholesale) by R1.04 cents a litre, while illuminating paraffin (SMNRP) will jump by R1.39 per litre. The maximum retail price of LP gas will increase by R1.79 per kilogramme.
The Department of Energy (DoE) said in a statement on Monday that South Africa’s fuel prices were adjusted on a monthly basis, informed by international and local factors.
“International factors include the fact that South Africa imports both crude oil and finished products at a price set at the international level, including importation costs, eg shipping costs.”
The department attributed the main reasons for the latest fuel price adjustments to the rand/US dollar exchange rate.
“The rand depreciated, on average, against the US dollar (from 13.90 to 14.90 rand per USD) during the period under review. This led to a higher contribution to the Basic Fuel Prices (BFP) on petrol by about 50.00c/* and diesel and illuminating paraffin by about 52.00c/* .”
A further contributing was the increase in the price of crude oil which went up from 74.25 USD to 78.25 USD per barrel.
“The main contributing factors were the unwillingness by the Organisation of Petroleum Exporting Countries (Opec) to increase their production outputs and negative impact of the hurricanes on petroleum infrastructure in the USA during the period under review. Furthermore, the looming sanctions against Iran oil exports by the USA will put more pressure on the crude oil prices.”
The Automobile Association (AA) on Friday warned that fuel users are facing unprecedented price increases in October that it described as “catastrophic” for road users.
The AA noted that the major culprit is the country’s economic policy which has left South Africans defenceless against upticks in international oil prices.
In September the DoE decided to intervene temporarily to provide some relief against fuel price hikes.
FNB Agric Business warned on Monday that the increase would place a further strain on consumers and hurt consumption growth.
“The South African Reserve Bank (Sarb) earlier indicated that household consumption has already fallen by 1.3% in the second quarter of 2018 as spending on goods declined, particularly durables which were down 11.2%,” Dawie Maree, head of marketing and information at FNB Agric Business, said yesterday.
“Small business and the poorer households will bear the brunt as their transport costs account for a large portion of household expenditure and the consequence of sustained fuel price increases will further erode disposable income and cause financial stress. This will force a change in spending patterns with a cut in spending on luxury items and frequency of visits to eateries.”
Maree stated that locals faced a dim festive season if the current pace of fuel price increases was sustained in the two months ahead.
“At producer level, the impact will be cost pressures as we head into the new planting season for summer crops. The higher crude oil price, which has now breached the US$80/barrel level, is a double whammy due to the direct influence on the fuel price and the indirect influence on oil derivatives such as fertiliser, pesticides and herbicides (agrochemicals) all of which are inputs in crop farming. This will squeeze profit margins if agriculture commodity prices do keep up with the pace of input cost increases.”
Week after week, there is always a petrol price hike threat to consumers in South Africa. Over a period of 10 years, the petrol price has fluctuated, increasing by a whopping 66% from R9,66 to R16,08. In the last 8 months of 2018, the price has increased from R14,42 to R16,08 inland.
The price hikes in 2018 alone placed a strain on the consumers and prompted the public outcry that led to the subsequent intervention by the government. The Department of Energy intervened after the Automobile Association (AA) of South Africa anticipated a drastic 23c to 25c per litre fuel price increase for the 5th of September 2018. The intervention led to the fuel price only increasing by 4.5c per litre.
According to Central Energy Fund calculations, local consumers could be hit by another bombshell as early indicators are that the fuel price could rise by R1.14 a litre in October. Making matters worse is the shock of the recession and the threat of downgrades by rating agencies.
OLX believes this directly affect more than three thirds of their users. “While OLX prides itself for making it super easy to buy and sell almost anything, our main source of traffic is price-conscious car buyers,” says Diana Mjojo, Communications Manager at OLX South Africa. “With the fuel prices going up again, this is a trend we don’t see coming to an end any time soon and we’re concerned about how it affects our users.”
9 out of the top 10 search terms for 2018 on the OLX platform are for the Cars & Bakkies category. According to the company, the OLX car buyer is financially savvy. They are willing to accept higher mileage vehicles if it means the price of the vehicle is lower.
Mjojo says OLX users are willing to save as much money as possible during these economically hard times. “Users will often pick the practical option over luxury, which may include older models, if it means the vehicles are cheaper. Not only are they conscious about the price of the vehicle but about the petrol consumption as well,” says Mjojo.
OLX advises consumers who aren’t already buying their cars on the platform to consider doing so as that is a smart way to save and set yourself economically free. “Whether you are looking for your first car, need a car to match your muscles or upgrading, OLX is a central place for you. We work with car dealerships that list their approved cars on the platform,” adds Mjojo.
Source: The Citizen
The Democratic Alliance says the department of energy’s no-show at a parliamentary meeting on fuel hikes is ‘disrespectful’ to people struggling with the high cost of living.
Davis was reacting to Energy Minister Jeff Radebe and his department’s failure to pitch for a meeting with MPs about fuel hikes.
“Minister Radebe and the energy department’s failure to turn up at an energy portfolio committee meeting on the petrol price is the clearest indication yet that government has no plan to deal with escalating fuel costs.
“This no-show by a government delegation was disrespectful to parliament and, more importantly, disrespectful to the millions of South Africans who are struggling with the high cost of living,” he said.
Davis said Radebe was supposed to communicate on the petrol price in the second week of July, but he had said nothing.
“This was his opportunity to offer South Africans hope that government had a plan to cushion the blow of high fuel costs. The minister has an opportunity to prove us wrong by appearing before the committee next Tuesday and presenting a credible plan to bring down the price of petrol,” he said.
Earlier on Tuesday, chairperson of the portfolio committee on energy Fikile Majola also slammed Radebe’s department for what he described as a “boycott” of the meeting.
Majola said the minister would be summoned to parliament next week to explain the department’s failure to attend the meeting.
Petrol price has increased from R13.76 in March to R16.02 in July.
Logistics transport costs for companies are set to skyrocket as the fuel price continues to rise, says Morne Janse van Rensburg, CEO of VSc Solutions.
In a review of fuel prices over the past few months, Eqstra Fleet Management has established that the 2014 fuel price has bucked the historical trend and that the increase during the current financial year will only be in the order of 10%.