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
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.
By TJ Strydom for Business Live
Motorists will this week get their steepest increase at the pump in four years as the recent slide in the rand and higher global
oil prices are passed on and a hike in government levies takes effect.
The retail price for 95 octane petrol is set to rise R1.31 per litre inland on Wednesday and R1.26 on the coast, the Central Energy Fund (CEF) said on Saturday. Diesel prices will rise about 82c.
The increases will pile pressure on consumers who are reeling from a value-added tax increase in 2018 and face
another bout of electricity price hikes. Prices rise 14% for direct Eskom customers on Monday and for a similar amount for municipal customers on July 1.
Fuel price hikes usually have a second-round effect as wholesalers, retailers and other service providers gradually pass the increases on to their customers. And the hikes are notoriously “sticky” when it comes to inflation — taxi fares that rise when fuel becomes more expensive do not necessarily fall when prices at the pump
Petrol at R16.13 per litre is still cheaper than it was as recently as December, but the increase is the harshest since April 2015, according to data from the Automobile Association.
With weak economic growth and the turmoil at the SA Revenue Service contributing to an expected revenue shortfall of more than R42bn and personal and company taxes at their
limit, the Treasury has shifted increasingly to other avenues for taxation. Government-imposed levy adjustments account for 20c per litre of this week’s increases, with 15c going to the fuel levy and 5c to the Road Accident Fund. These increases were announced by finance minister Tito Mboweni in his budget in February. Roughly a third of the amount motorists are charged go to these coffers.
“With effect from 3 April 2019, the fuel levy in the price structure of petrol and diesel will amount to 352c per litre and 337c per litre respectively. The Road Accident Fund levy in the price structure of both petrol and diesel will amount to 198c per litre with effect from 03 April 2019,” the CEF said.
The fund said the weaker rand, which on average depreciated from R13.80 in the previous month to R14.39 in the latest month, and higher global oil prices were responsible for the rest of the hike. When the Bank announced its interest rate decision last week, the size of the increase was already easy to forecast using CEF data.
Though consumer price inflation is comfortably within the Bank’s target, it flagged global oil prices and the effect it will have on domestic fuel costs as one of the upside risks to its inflation outlook when it left the repo rate unchanged at 6.75%.
Fuel prices, along with higher food and electricity costs, were expected to lift inflation over the medium term, Bank governor Lesetja Kganyago said.
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.
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.”
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.
By James de Villiers for Business Insider SA
The price of a litre of petrol in South Africa increased from R6.92 in July 2008 to R15.53 in July 2018 at the coast, and from R7.16 to R16.02 inland – nearly tripling in the last decade.
Over the same period, the tax (or fuel levy) on a litre of petrol increased from a low of R1.27 in July 2008 to R3.37 in July 2018.
This means the tax on fuel increased by 165.35% in 10 years.
On Sunday, the department of energy announced that a litre of unleaded petrol will increase by 26c, pushing the price of a litre past R16 in the inland for the first time.
Energy Minister Jeff Radebe ascribed the increasing petrol price to the rand’s poor performance to the US dollar.
Radebe said the increase would have been 20c more if it wasn’t for declining oil prices.