Publications
Partners
- For more financial news, go to the News24 Business front page.
Petrol and diesel prices are currently on track for painful hikes at the start of March.
The latest estimate from the Central Energy Fund (CEF) shows that the price of 95 unleaded petrol is due for an increase of R1.36 a litre, while the wholesale price of diesel will increase by between R1.43 and R1.58 a litre.
Illuminating paraffin may be hiked by almost a rand.
South African fuel prices are largely determined by international oil costs and the rand exchange rate, as oil is priced in dollars.
Brent crude oil has climbed from $77 a barrel from the start of the month to its current level of $81.
The Department of Mineral Resources and Energy previously noted that oil prices were heading higher, due in part to attacks on Red Sea oil cargoes, which caused shipping companies to reroute oil cargoes around the Cape of Good Hope. This increased shipping rates as the route is much longer. Cold weather in the US hit output as well.
But while the oil price has also been supported by output cuts by large producers, the International Energy Agency said this week that the demand for oil is losing steam while the US, Brazil and others are ramping up output - potentially leaving oil markets in surplus all year.
From R18.57/$ at the start of the month, the rand hit R19.21 earlier this week amid concerns that US interest rates may not be cut as early as expected. It was trading at R18.96 on Thursday afternoon.
The outlook for petrol and diesel prices could still change over the course of the month, as the final prices will only be determined at the end of February.
The expected hefty increases in March confirm that a review of the fuel price is necessary to establish if any components within the current pricing model can be revised by the Department of Mineral Resources and Energy to mitigate against rising costs, said the Automobile Association in a statement. The diesel price needs to review in particular, as higher input costs will be recovered through higher prices on consumer goods.
"In addition, we again call on the Minister of Finance to strongly consider not increasing the General Fuel and Road Accident Fund levies in his Budget Speech on 21 February. Any relief – even in the form of non-increases – would be welcome to a consumer base already reeling from economic hardship," the AA said.
At the start of February, unleaded petrol of both grades (93 and 95) was hiked by 75c a litre, which brought the Gauteng price of 95 unleaded petrol to R23.24 a litre, while the coastal price reached R22.52.
The wholesale price of diesel increased by between 70c and 73c, leaving the Gauteng diesel price at R21.36 a litre, with the coastal price rising to R20.64.
