Tag: petrol

Source: News24

According to the latest data from the Central Energy Fund, petrol and diesel prices currently look set for large increases in the first week of June.

Adding to the blow is the return of the full general fuel levy (GFL), which government cut by R1.50 per litre for two months. The levy is supposed to be restored at the end of May.

This will increase the levy for petrol from R2.35 to R3.85 per litre. The levy on diesel will be hiked from R2.20 to R3.70 per litre.

In addition, based on current data from the CEF, petrol is expected to increase by between R1.93 and R1.97 a litre, diesel is expected to increase by between R1.60 and R1.62 a litre, and illuminating paraffin is expected to climb by a R2.14 a litre.

The Automobile Association (AA) says together with the return of the general fuel levy this will “result in price shocks never seen before”.

In combination, the petrol price could be around R3.47 a litre more expensive than current levels.

“In late March government reduced the GFL by R1.50 for April and May which brought temporary relief to consumers. The big question now is how government plans to deal with rising fuel costs from June onwards, especially given that baseline prices are forecast to move significantly upwards in June,” notes the AA.

The association says it must be noted that these price increases reflect data from the middle of the month, and that the final data may vary between now and when the adjustment is finally made.

Local fuel prices are determined by international oil prices, as well as the dollar-rand value, as South Africa buys oil in dollars.

The rand is currently trading around its worst levels since November last year, while Brent crude remains close to $110 per barrel.

The AA says while government’s relief on the GFL was welcome, a longer-term solution is needed. It says when government announced the relief in March, it also noted other measures proposed by the Minister of Mineral Resources and Energy to be introduced after the expiry of the temporary measures.

“We are rapidly nearing the end of May and the fuel outlook is looking bleak. Government needs to address this issue sooner rather than later; consumers are anxious about what lies ahead, and government should allay these concerns by indicating as early as possible what steps it will be taking to mitigate against rising fuel costs,” says the AA.

Petrol and diesel prices have surged by more than a third over the past year.

 

Source: News24

Petrol prices will be lowered on Wednesday, while diesel will get pricier, the Department of Mineral Resources and Energy announced on Tuesday.

The petrol price (both 93 and 95) will be cut by 12c a litre, while diesel will be hiked by 98c (0.05% sulphur) and 92c (0.005% sulphur).

Paraffin prices will increase by 79.60c/l.

Local fuel prices are determined by international oil prices, as well as the dollar-rand value, as South Africa buys oil in dollars. Petrol and diesel prices have surged by more than a third over the past year.

The average Brent crude oil price fell from an average of $109.37 a barrel in March to $104.78 in April, thanks in part to new Covid-19 lockdowns in China, which reduced demand for crude oil. Also, the US released some of its oil strategic stocks to curb price increase.

“The impact of these two factors was not that significant as the average price of crude oil only decreased slightly during the period under review and is still high,” said the department.

The invasion of Ukraine has triggered an oil price shock. Russia is the world’s third-largest producer of crude oil, and it has been locked out of Western markets, pushing oil prices higher.

Local fuel prices continue to benefit from a temporary cut of R1.50 in the general fuel levy for April and May.

The total fuel levy will remain R2.44 a litre for petrol and R2.30 for diesel in May.

 

Give SA a fuel tax holiday, Parliament urges

By Khulekani Magubane for New24

Parliament’s Portfolio Committee on Mineral Resources and Energy has proposed that Mineral Resources and Energy Minister Gwede Mantashe and Finance Minister Enoch Godongwana consider introducing a temporary tax holiday on South Africa’s fuel products to ease pressure on South Africans facing fuel price hikes.

The committee resolved to propose the intervention on Tuesday, following growing upward pressure on the price of fuel, including the continued conflict between Russia and Ukraine. The war has driven oil prices to a high of $130 a barrel.

This comes after Godongwana told a plenary of Parliament’s National Assembly last week that government intended to shield South Africans from a spike in fuel prices. The minister said National Treasury was in “sensitive discussions” about this, with plans to “take some immediate steps for April and May”.

Committee chair and ANC MP Sahlulele Luzipo told Fin24 on Tuesday that the committee resolved to send the proposal formally to both ministers for consideration. He said the structure and modalities around such a tax holiday would be left to the minister to decide.

“It’s directed to the minister in his engagement with his counterpart at National Treasury. They must determine the process but no one doubts the emergency of the situation right now,” said Luzipo.

Earlier this month, the Automobile Association projected that petrol and diesel prices currently look set for record increases in the first week of April.

The association’s data suggested that 95 octane petrol is set to increase by R2.15/l, while 93 octane is expected to climb by R2.07/l, diesel by between R2.94/l and R3.08/l and illuminating paraffin by R2.51/l, with little to cushion the blow on South African households.

 

Price hike double-blow to hit South Africa

Source: Supermarket & Retailer

South African motorists can expect another record-high petrol price hike in April, with suppliers and manufacturers also likely to pass on additional costs to consumers as they cannot absorb these rapid fuel increases, say economists at the Bureau for Economic Research (BER).

The combination of the rising oil price on fuel and food costs will lead to rapidly increasing inflation, the group said in a research note on Monday (7 March).

The BER now forecasts that headline Consumer Price Inflation (CPI) will average 5.5% in 2022 – up from its initial 5% forecast in January. Given the further oil price surge in recent days, this updated forecast is already outdated, with further upward revisions required if oil stays at these levels, it said.

“This is especially the case as a growing list of local companies are commenting that they can no longer absorb a sustained rise in input costs and will now start to pass these on to the end consumer.

“These second-round price effects risk compounding the direct impact that the higher fuel price will have on driving measured South Africa inflation higher.”

It added that the additional upward pressure on inflation will squeeze household purchasing power across the globe, especially in the Euro Zone and the UK where gas forms an important part of the energy mix.

“Therefore, by exacerbating global price pressures, the Russia-Ukraine war will weigh heavily on the near-term world and domestic growth,” it said.

Because of the likely adverse domestic growth impacts of higher fuel and food prices, as well as the downside global growth risks, the BER said that it expects the South African Reserve Bank (SARB) will increase the policy interest rate by another 75bps in 2022.

“The next 25bps hike is pencilled in for the end of March. However, given rising risks of secondary price effects emerging and in order to anchor inflation expectations, the risk is that the SARB sees the need for a more aggressive, front-loaded hike in March. Still, such a move will risk compounding the impending hit to real GDP growth.”

Source: News24

The conflict in Ukraine might be geographically far removed from South Africa, but its ripple effect might soon be felt by local consumers.

If the Russian invasion of Ukraine – described by some as the darkest hour for Europe since World War 2 – is not resolved quickly, SA could feel a squeeze from spikes in petrol prices, as well as earlier and bigger interest rate hikes by the SA Reserve Bank to curb inflation, and higher bread prices.

Furthermore, a lower demand for SA’s commodities and a “risk-off” attitude among investors towards emerging markets, could end up impacting the rand.

“All in all, it is not good for South Africa. Estimations used for SA’s national budget tabled on Wednesday did not consider a war in Ukraine, which could impact global growth and in turn that of SA, depending on how protracted the war ends up being,” says economist Thabi Leoka.

Fuel prices

On Thursday, the global oil price surged past $105 per barrel after Russia sent military forces into parts of Ukraine, increasing fears of a war in Eastern Europe. Russia is a key producer of crude oil and the market is nervous that oil supplies will be disrupted.

“Oil is South Africa’s biggest import item, so the immediate impact on consumers’ pockets will be higher petrol prices,” says Maarten Ackerman, chief economist at Citadel Investment Services.

Before the latest oil price spike, the petrol price looked set for a hike of around R1.25 a litre in the first week of March. This would push the price of 95 octane petrol in Gauteng to a record high of above R21.

However, the petrol price hike is now bound to be even steeper due to the latest oil run, as well as a sharp shock to the rand on Thursday.

South Africa buys oil in dollar, and therefore the fuel price is also determined by the exchange rate. On Thursday, the rand weakened by almost 3% to R15.46. A week ago, it was trading below R15.

As a consolation, Johann van Tonder, economist and researcher at Momentum Insights, points out that at least the fuel levy was not increased in the national budget tabled on Wednesday.

Analyst Peter Attard Montalto of Intellidex, thinks there could be a R1.30/litre petrol price hike in March and maybe another 30c/l to 40c/l hike in April – despite the freeze on a fuel levy increase.

“Higher petrol clearly affects the poorest most and can force the share of poor households’ incomes spent on transport costs through the roof,” says Attard Montalto.

The rand

The Russian rouble crashed to a record low, and Leoka expects that the volatility in the Ukraine will have consequences for the rand.

“Like South Africa, both Russia and Ukraine are emerging markets, and typically investors move away from emerging markets when they are seen as riskier,” she explains.

In addition, the war could slow economic growth – dampening the demand for commodities. As South Africa is a major commodity exporter, this could weigh on the rand, says Ackerman.

“The conflict in Ukraine will slow down global growth, which has just been recovering from the Covid-19 lockdowns. What that means for SA is a further disruption of demand for our goods,” cautions Leoka.

Despite an increase in market risk, the rand is still the fourth-best performer against the US dollar from its emerging market peers on a year-to-date basis – 5% stronger – according to Sanisha Packirisamy, chief economist at Momentum Investments.

U.S. stocks ended sharply higher on Thursday, led by a 3% gain in the Nasdaq, in a dramatic market reversal as U.S. President Joe Biden unveiled harsh new sanctions against Russia after Moscow began an all-out invasion of Ukraine. This report produced by Chris Dignam.
Reuters

Agriculture and food prices

Russia and Ukraine account for 25% to 30% of the world’s wheat exports, so there could be upward pressure on grain prices, Packirisamy says.

“Even before the Russia-Ukraine issue flared, fertiliser prices were already a problem for SA farmers,” she adds.

SA exports a limited number of agricultural products to Russia and Ukraine – mainly citrus, nuts, vegetables and tobacco, according to Wandile Sihlobo, chief economist of the Agricultural Business Chamber of SA (Agbiz).

It does, however, import wheat from the two countries.

Sihlobo says the Ukraine-Russia conflict is beginning to add a lot of anxiety on the grain market.

“For South Africa, in the near term, it might not be affected through shortages of supplies, but what we will see is an upside risk on the food price inflation side as it continues to add to the global price surge. It would depend on the length of the conflict as well as the scale of the disruption on trade,” says Sihlobo.

Decent harvest projections, however, should shield SA to some degree, according to Attard Montalto.

Inflation and interest rates

The combination of higher fuel prices, pricier wheat and a weaker rand will push inflation higher in South Africa.

Attard Montalto expects the Ukraine conflict could bring headline inflation up to around or just above 6% through the second quarter of 2022, from 5.7% currently.

“This opens up the need for 50 basis points interest rate hikes rather than just 25 basis point moves to get back to neutral inflation rates [5.75%] faster,” he says.

But Van Tonder points out that SA’s inflation targeting rules make provision for the SARB not to increase interest rates stemming from shocks such as wars. The SARB will probably look through the inflationary effect of the oil price shock and manage interest rates accordingly, in his view.

Packirisamy also believes the SARB will be cautious in assessing the second-round effects of the energy price shock.

“If the SARB believes this shock to be short-lived, they may look through the initial inflation effects and assess whether the energy shock has caused broader-based inflation pressures. We are looking for an additional three interest rate hikes, of 25 basis points each this year from the SARB,” she comments.

If needs be, the SARB will reassess its stance on monetary policy and bring forward expected interest rate hikes which may previously have taken place on a more staggered basis, she says.

Should the situation in Ukraine calm down relatively quickly and oil prices return to lower levels, then a longer-term impact on South Africa’s inflation rate could be avoided, according to Ackerman.

It can take six to nine months for South Africa’s inflation rate to reflect a currency slump, for example.

 

Petrol breaks R20/litre mark

By Jason Woosey for IOL

South African motorists and commuters are facing a full blown crisis with both petrol and diesel set to go up by a massive margin from 1 December, pushing the petrol price past R20 per litre for the first time ever.

According to the Department of Mineral Resources and Energy, both grades of petrol will go up by 81 cents per litre from Wednesday, December 01, while 50ppm diesel will increase by 74 cents and 500ppm by 72 cents. Illuminating paraffin will rise by 42 c/l.

The December fuel price adjustment will see the cost of 95 Unleaded Petrol rising to R19.63 per litre at the coast and R20.35 in the inland regions, where 93 Unleaded will rise to R20.13.

The wholesale price of diesel will increase to R17.30 at the coast and R17.92 in Gauteng, keeping in mind that the unregulated retail prices (which vary between outlets) will be somewhat higher than that.

What is driving the price higher?

The price of Brent Crude oil increased marginally during the month of October, from an average of $82.50 per barrel to $83.00. This alone would not have made a big difference to the December fuel price, however, the rand depreciated from an average of R14.72 in the previous month to R15.85 this month, the energy department said. The Slate Levy, which is used to compensate the industry for cumulative under recovery, also saw an increase of 26.30 c/l.

Fuel taxes and levies currently account for R6.11 per litre of fuel, a fact which is proving increasingly controversial as higher oil prices and a weak rand drive prices up on a monthly basis.

Earlier this year, Outa released a graphic showing that more than 50% of the cost per litre of petrol is made up of levies:

Petrol drives food prices ahead of Christmas

Source: Supermarket & Retail

This week, the price of petrol increased to a record R19.54 by R1.21 a litre, an increase that will exacerbate the already high cost of food, analysts say.

“The recent fuel price does not bode well for the inflation profile in the short- to medium-forecast horizon, particularly food inflation. This is also exacerbated by the fact that there are other cost-push pressures, like fertiliser costs and electricity costs,” Kulani Siweya, Agri SA’s chief economist, told Business Insider SA.

He said the uptick in retail prices might come as a result of retailers charging more to account for the higher transportation and distribution costs that come with continued fuel hikes and other factors.

Paul Makube, a senior agriculture economist at FNB, said the higher fuel price will affect all agricultural produce but will mostly impact fresh produce and meat products given their sensitivity and frequency of distribution.

“Going into the festive season, we are expecting food prices to remain elevated as meat prices are expected to remain firm on strong demand that comes with the festive season as well as lower slaughter numbers and rising world prices as we have seen play out this year,” Siwela said.

He said that prices for chicken, which have also remained high due to strong global prices, may remain elevated.

Currently, meat prices are already being pushed up by high production costs and rising feed costs. Weaner calf prices are 13% higher than they were last year at this time.

A kilogram of class A beef averages around R53.46 and has increased 3.5% year-on-year, while class C beef has risen by 8% to R45.64. While lamb and mutton prices are generally lower than last year, they are still 11% over the three-year average for this time of the year.

Poultry prices have risen 22% since last year at the same time for fresh whole birds, while frozen chicken has risen over 15%.

On the vegetable front, butternuts are currently averaging R7,00 a kilogram, while cabbages cost R2.28 and onions, R2.72. Potatoes cost around R6,39 for a kilogram, while tomatoes are R8,13.

Other factors contributing to higher food prices include global food prices on the rise that are spilling over into the domestic market and electricity inflation, Siwela said.

The global shipping crisis has also caused financial constraints and, in some cases, delayed the arrival of critical input products such as pesticide and herbicide, which South Africa imports close to 80% of, Makube said.

“Internationally, the supply chain crisis impacted on the distribution of raw products to manufacturing plants. Manufacturing plants could not get the right ingredients on time due to the logistics and the supply chain crisis which we’ve been having,” he said.

Makube said an adequate supply of food expected for the festive season might be able to offset the impact of the fuel hike on the price of food.

 

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”.

Petrol approaches R18 per litre

By Jason Woosey for IOL

South African motorists, who are already reeling from record fuel prices, will have to fork out even more from Wednesday, August 4, as the Department of Energy has announced steep price increases for both petrol and diesel.

Both grades of petrol are set to increase by 91 cents a litre, while the wholesale price of diesel will rise by 55 cents. This means that from Wednesday, South Africans will pay R17.58 for a litre of 95 Unleaded petrol at the coast and a whopping R18.30 in the inland regions, where the cheaper 93 Unleaded petrol will now retail for R18.11. The price of 50ppm diesel will rise to R15.06 at the coast and R15.66 inland, but keep in mind that these are wholesale prices and the (somewhat higher) retail prices for diesel will vary between fuel stations.

How much more for a tank?

What do these price increases mean in terms of the cost of a tank? Putting 35 litres of 93 Unleaded petrol into the 40 litre tank of a Volkswagen Polo (assuming you’re sensible enough to never arrive with less than five litres on board) will now cost you R634, or R31.85 more than it currently costs. Putting 50 litres into a mid-sized car like a Toyota Corolla will now cost R905.50, which is R45.50 more. 75 litres of diesel in a large SUV like the Toyota Fortuner, or a Hilux bakkie, will cost an extra R41.25 versus last month.

According to the Automobile Association, the price of petrol in August will be around 23 percent higher than in January, while diesel would have risen by around 20%.

“The average Rand/US dollar exchange rate consistently trended upward during July and the weaker local currency will make it more expensive for South Africa to import fuel,” the AA said, also noting that international oil prices averaged at a higher level last month. Fuel taxes and levies such as the Road Accident Fund levy, which increase annually, are not helping the situation, accounting for R6.11 per litre of fuel.

 

Petrol price set to increase on Wednesday

Source: eNCA

Motorists can expect an increase in petrol prices on Wednesday.

The Department of Energy says Petrol is set to increase by 29 cents a litre of 93 unleaded petrol.

And leaded petrol will increase by 26 cents a litre.

Diesel will see an increase of 42 cents and illuminating paraffin by 36 cents.

Petrol and diesel prices are largely determined by the oil price, as well as rand strength, given that South Africa must buy oil in the US dollar.

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