International petroleum prices this week suffered one of their steepest plunges in recent years as coronavirus fears impacted global economic activity.
The silver lining in this cloud are predicted substantial fuel price reductions for South Africans, says the Automobile Association (AA).
“The impact of the novel coronavirus outbreak on global economic activity cannot be over-stated, and petroleum prices have retreated in lockstep with the downturn across world markets,” the AA said.
“Under normal circumstances, we would be focusing on our serious concerns over the rand’s trajectory, with the local currency having depreciated by nearly 30 cents against the US dollar since the start of February.
“However, these declines have all been overrun by the pullback in oil.”
The Association said it forecasts that month-end fuel price declines of between 9 and 19 cents a litre are on the cards for petrol, 55 cents a litre for diesel, and 68 cents for illuminating paraffin.
“It is difficult to predict where current events might lead us. The rand has not found strength against the US dollar since Finance Minister Tito Mboweni’s budget speech, and the consensus of economists is increasingly that South Africa is set to lose its last remaining investment grading before long,” the AA said.
“This will inevitably affect the Rand/US dollar exchange rate, but the precipitous global decline in confidence and economic output as the coronavirus outbreak spreads could provide a balancing factor in the form of lower international petroleum prices.”
The Association says South African fuel users should not take any outcome for granted, since the full effects of the coronavirus and future South African economic conditions are far from clear.
“Knock-on effects cannot be predicted and it would be unwise to budget for further fuel price drops at this stage,” the AA concludes.
The table below outlines the expected petrol price changes for March, based on the latest data from the CEF. Official petrol price changes for the month will be announced next week, before implementation on 4 March.
|Fuel (Inland)||February official||March Expected|
|0.05% Diesel (wholesale)||R14.57||R14.02|
|0.005% Diesel (wholesale)||R14.62||R14.07|
While a drop in March is likely, motorists will have to contend with fuel tax hikes in April
As part of his 2020 budget speech, Finance minister Tito Mboweni announced that fuel taxes will rise by 25 cents per litre come 1 April.
This includes a 16 cents per litre increase to the general fuel levy, and a 9 cents per litre increase to the Road Accident Fund levy.
This will push up the general fuel levy from R3.61 per litre of petrol, to R3.77 (a 4.4% increase), while the RAF levy will jump from R1.98 to R2.07 (a 4.5% increase).
For diesel drivers, the general levy increases from R3.47 to R3.63, and the RAF levy will also increase to R2.07.
In effect, this means that for every litre of petrol and diesel, motorists will pay R5.84 and R5.70 in tax, respectively.