Today, the cost of fuel will crest past the R20 per-litre mark for the first time ever in South Africa. Petrol will set you back R20,35 for 95ULP while diesel now sits 75 cents higher than before. The Automobile Association states that the price of oil plays almost no part in this round of increases.
The Association says the increases again point to the need for an urgent investigation and recalculation of the current fuel pricing model and its existing elements. “This price disaster is entirely home grown. Internationally, oil prices have pulled back from their recent highs and Brent Crude is currently trading around $75 a barrel. The majority of this month’s under-recovery is because of the weakening of the Rand against the US dollar,” the Association notes.
The AA says that while the recent travel bans related to the Omicron variant of COVID-19 had caused a spike in the exchange rate, the underlying weakness was a continuation of a trend which began with the mid-year riots and looting.
“In under six months, South Africa has slipped from R13,40 to the US dollar in June to its current price pegged at around R16,15.”
Increases in the Retail Margin and a related bouquet of costs which are traditionally adjusted for December annually (such as Wholesale Margins and Secondary Storage and Distribution) were fairly modest, and totalled around an extra 17 cents a litre.
“The increases year-on-year since December 2020 are astronomical. Petrol has increased by more than 40 per cent, diesel by around 44 per cent, and illuminating paraffin by more than 70 per cent. Wages and salaries have not kept pace with these heavy increases, and consumers will undoubtedly be under more financial pressure because of the knock-on effects on other products,” notes the AA.
From January to the latest increase for December announced yesterday, ULP95 petrol has increased by a staggering R5,87 a litre, while ULP93 petrol has increased by R5,89 a litre over the same period. Diesel 0,05 has climbed by just under R5,47 a litre over this period, while diesel 0,005 has increased by R5,50 a litre. Users of illuminating paraffin are paying R4,83 more in December than they did in January.
“These increases are severe and will undoubtedly have major negative implications on already financially constrained consumers. In the last two months alone, petrol has increased by more than R2 a litre, diesel by between R2,21 and R2,23 a litre, and illuminating paraffin by R1,83 a litre. These massive increases, we believe, strengthen our call for a review of the fuel price structure, and for a recalculation of all the elements that comprise the fuel price,” concludes the AA.
