Energy

Expect a “monster” petrol price hike next week

Staff Writer

 ·26 Sep 2018

South African motorists should prepare themselves for a massive petrol price hike next week, as international petroleum prices continue to climb.

This is according to the Automobile Association of South Africa, which said that drivers can expect a price hike of over R1.00 per litre for petrol, and as high as R1.50 per litre for diesel.

Speaking to Talk Radio 702, the AA’s Layton Beard said that despite some gains made with the stronger rand, rising international oil prices have undone any of the good we have seen in the past few weeks.

“It’s certainly going to be a huge increase – I think we said at the time that it will be a monster increase, and we stand by that,” Beard said, referencing comments made mid month.

“The outlook is bleak,” he said, adding that if there is any government intervention (which is unlikely), it will not be significant.

The Department of Energy took the unprecedented decision in September to put in place a once-off intervention in the fuel price, that saw prices go up by only five cents per litre (a hike to cover the costs of wage increases in the sector).

This saved South African motorists from a 23-25 cents per litre increase, but as many analysts and economists pointed out, only delayed the inevitable.

South Africa’s fuel prices are determined using a methodology that factors in changes in international prices as well as the going exchange rate over a specific period. Without cutting the levies and taxes that are charged, there is little the government can do over the long term to change prices.

According to the AA, the petrol price hike might be below R1.00 per litre come next Wednesday, but at current rates, this is where things are sitting.

The latest data from the Central Energy Fund (CEF) shows that there is an under-recovery of R1.01 per litre of petrol, while diesel is showing an under-recovery of around R1.25 per litre.

Should prices increase at current rates, it means that petrol will climb to its highest-ever point, with 95 octane shooting past R17 a litre, and 93 octane coming close.

The Department of Energy is expected to announce price increases on Friday (27 September).

Read: Petrol prices expected to hit R17 a litre in October