Sorry, folks: SA facing a petrol-price hike (but diesel set to fall)…

South African motorists are likely to face a petrol-price hike at the start of June 2020, according to the Automobile Association.

Commenting on unaudited mid-month fuel price data released by the Central Energy Fund, the AA said May 2020 oil prices “rebounded off their late-April crash while the rand steadied around its new level”, adding this left a “mixed picture” for SA fuel users.

The mid-month data predicted an increase of up to 50 cents a litre for petrol, while diesel was heading in the opposite direction, with declines of up to 56 cents, according to the AA. There was also an anticipated 75-cent decline in the price of illuminating paraffin.

“In a dramatic reversal of last month’s oil swings, international product prices used to calculate South Africa’s basic fuel price have nearly doubled since their lows at the end of April,” the AA explained.

“Over the same period, the rand has settled in around the level of R18,40 to the US dollar, almost three rand weaker than just three months ago prior to the advent of the COVID-19 panic and multiple downgrades of our economy by ratings agencies.”

The AA said despite this, SA motorists currently had “unusual capacity to absorb fuel price increases”, with most grades of fuel around four rand a litre cheaper than at the start of 2020. Motorists are also driving far less due to the lockdown, the organisation points out.

“Our concern, of course, is that the financial situation of many South Africans has changed for the worse in the last two months, with massive job losses and talks of across-the-board salary cuts. This could make South Africans sensitive to even small fuel price increases,” the Association said.

The AA explained the differences between the movements for different fuel prices were likely related to “imbalances in global refining capacity in the first week of May” as the oil industry came to grips with the unprecedented April oversupply and price crashes.

It said it expected fuel price volatility to be “substantial and long-lasting” as the world economy adjusted to the new reality of a spreading pandemic.

“We advise motorists who are re-drawing their budgets to take nothing for granted,” the AA warned.

Article written by

CAR magazine