By Tom Head for The South African
For the third month in a row, the petrol price has decreased in South Africa. March will see the following substantial changes to fuel costs.
A substantial drop for both the diesel and petrol price in South Africa has put our motorists in a good mood at the start of March.
Confirmed petrol price for March 2020
Petrol getting cheaper, but so is diesel and illuminating paraffin:
- Petrol: Decrease of 19 cents per litre
- Diesel: Decrease of 54 cents per litre
- Paraffin:Decrease of 68 cents per litre
Subtracting these totals from February’s fuel price gives us the following average cost-per-litre for petrol and diesel. These prices will take effect from Wednesday 4 March:
- Inland petrol price – R15.84
- Coastal petrol price – R15.07
- Inland diesel price – R13.49
- Coastal diesel price – R14.03
Why is the petrol price dropping in March?
There are, as ever, two major factors at play. However, it’s the global oil price trends that have accounted for this slashing of fuel costs. The outbreak of the coronavirus has left international markets spooked, and the demand for oil has subsided. The decrease would have been more, if not for the Rand’s weak monthly performance against the US dollar. Despite a brief rally this week, ZAR is still floundering.
The honeymoon period is unlikely to last through to April, however. It was announced during February’s budget speech that taxes on fuel would be rising, making petrol prices more expensive.
South African consumers will experience their first price drop at the pumps in six months as the price of fuel decreases by nearly a rand today.
Petrol 95 will fall by 95 cents a litre and 93 octane by 96 cents, while diesel (0.05% sulphur) will decrease by 74 cents and diesel (0.005% sulphur) by 75 c/l.
However, analysts are pointing out that consumers will have little to celebrate as electricity tariffs hikes kicked in on 1 July.
Despite the fact that the average car will cos R30 to R40 less to fill, consumers are unlikely to achieve much relief.
- Bus and taxi fares are unlikely to go down
- Electricity tariffs are increasing
- The petrol price decrease only accounts for about R2.50 for every R1 000 people have
The price of petrol at the pump is set to rise by 74 cents a litre from 6 March.
The wholesale diesel price to rise by 91 cents a litre.
The Energy Department’s Robert Maake explains why prices are being increased.
“The main reason for this big increase is mainly the crude oil price. It was much higher during the current review period compared to the previous period. The Brent crude oil was around $34 per barrel while in the previous period it was around $16 per barrel.”
The Automobile Association’s Layton Beard says consumers will be hit hard in the coming months.
“The general fuel levy and the Road Accident Fund levy will be added to the fuel price in April. That is apart from what adjustment is made to the basic fuel price. And obviously, in June, there’s the addition of the carbon tax we have to wait and see on a day-to-day basis how those numbers pan out.”
This is the second consecutive increase in fuel price this year.
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.
By Tom Head for The South African
Has Santa Clause been listening to the South African public? A petrol price decrease of epic proportions is now certifiably on the cards for December, after the Central Energy Fund (CEF) released a new round of data.
Last week, we broke the news that the petrol price was likely to drop by more than R1.50 per litre. However, that figure may be nearer the R2 mark by the beginning of next month. Business Tech report that the rand’s gains against the dollar have propelled the costs into more affordable territory.
How much will the petrol price drop by?
All figures based on price per litre:
- Petrol 95: R1.67
- Petrol 93: R1.64
- Diesel: R1.14
- Illuminating Paraffin: R1.05
It’s been a hectic couple of months for the crude oil market, but one’s misfortune is another’s gain. The price for a barrel of oil has slumped to the $60 mark, compared with $85 in September. Donald Trump, this tweeter-in-chief, has even suggested oil prices could drop lower than this.
“The main driver of lower prices has been an accelerating decline in international oil prices, which have trended downwards since the beginning of this month,” said the Central Energy Fund in an official statement.
A perfect storm of positive factors for South Africa is leading us towards one of the most dramatic changes in monthly petrol prices ever seen in this country. It would be the ideal remedy to a year that has been infamous for soaring fuel costs, and October’s R1-per-litre increase.
It all makes for a pretty rosy picture heading into the end of 2018. Inland regions, such as Gauteng and Free State, will go from paying over R17 a litre to less than R15.50. Meanwhile, those near the coast will smash the R15 barrier altogether, as prices plummet even further.
What South Africans will pay for petrol in December 2018 – forecast:
- Inland: R15.41
- Coastal regions: R14.82
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.
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.
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.
By Bekezela Phakathi for Business Day
The possibility of reviewing the fuel levies downwards to ease the financial burden on motorists and consumers has not been ruled out, says President Cyril Ramaphosa.
“The fuel levy is part of fiscal architecture we have in our country … we have said we want to look at that … the fuel levy is precisely one of those we are looking at,” Ramaphosa said in parliament on Wednesday
“We are sensitive to the burden imposed on our people.”
The price of fuel recently went up to more than R16 a litre in inland provinces. The hikes are expected to have a ripple effect on the economy.
The price of a litre of petrol in SA has more than doubled in 10 years, while the levies increased from about R1.30 in 2008 to the current R5.30.
The fuel levy contributes close to R63bn annually to the fiscus. The Road Accident Fund levy accounts for R1.93 of the fuel price. Taxis and other public transport operators have already upped their fares in response to the increases.
Ramaphosa said any decision would have to weigh the advantages of reducing the fuel levy against the loss of revenue for the state, which will have an effect “on a whole lot of things”.
“It’s not as easy as snapping a finger and coming up with an answer … it’s one of those issues we continue to look at and seek solutions for.… We import a commodity we have no control of in terms of prices,” said Ramaphosa, during a question-and-answer session.
DA leader Mmusi Maimane had asked Ramaphosa whether there was a plan to reduce the fuel levy, which he called a “corruption tax”. “The RAF [Road Accident Fund] is declaring losses and money is being wasted. Is there a plan to reduce the fuel levy?” he asked.
Department of energy officials told parliament on Tuesday that any adjustment to the fuel levy could only take place in the next financial year.
The government has said before there is nothing much it can do to stem the fuel increases since the country imports the bulk of its requirements. The change in the price of petrol is typically a function of both changes in international exchange rates, particularly the US dollar-rand exchange rate, and the change in international crude oil prices.
Ramaphosa also answered questions on the unemployment crisis and the burning issue of land expropriation without compensation.
“Since 2009 I have heard about plans and summits, yet millions of South Africans are still unemployed,” said Maimane. “The definition of insanity is doing the same thing and expecting a different outcome or keeping the same people [in the cabinet] and expecting a different outcome.… Can we bring change so we can expect a different economic trajectory?”
Ramaphosa said the cabinet would soon announce details to stimulate economic growth, including finalising the Mining Charter and allocation of broadband spectrum.
“We want to unlock the levers that hold the economy back,” said Ramaphosa.
The president hit back at Maimane, saying: “I’ve not heard anything wise that you’ve said.… You are playing the people or the man, not the substantive issues that have to do with economic growth.”
Without land redistribution there would be no stability in the country, Ramaphosa said.
“Transformation means we must have redistribution of land because there was an injustice committed many years ago.… If you do not want stability then do not transform … but if you want stability then you must transform.… We will make sure that our country succeeds. Even the landowners must embrace this process,” he said.
The Organisation Undoing Tax Abuse (OUTA) has called on all citizens to join the group, and other organisations including faith-based movements and taxi associations, to put pressure on government to reduce the fuel levy by R1.
At 10h00 on Tuesday 31 July, OUTA and other groups will gather in Church Square, Pretoria, to hand over a memorandum to the National Treasury, calling for the reduction in the general fuel levy.
“South Africans have suffered under the burden of high taxes, maladministration and corruption for far too long. The exorbitant increases in the fuel levy during the Zuma era can be linked to Government’s need to increase its revenue to cover the costs of corruption that have permeated our state and continue to cripple our economy. Government leadership needs to do the right thing and reduce the fuel price by R1, if they are serious about easing consumer pressure, ” says Ben Theron, OUTA COO.
Concerned citizens are encouraged to lend their voices and participate in sending this important message to Government, by assembling at Church Square in Pretoria Central on Tuesday 31 July. In addition, social media activists can change their profile pic in the build-up and on the day of the march. OUTA will be making images available on www.outa.co.za.
“OUTA is an a-political organisation, that encourages people and movements from all sectors, including parties and labour unions to join us on Tuesday,” adds Theron.