It’s time to change how South Africa’s petrol price is calculated

South Africa’s record-high petrol prices mean it is time to change how fuel costs are calculated, says the Automobile Association of South Africa (AA).

The association was commenting on November 2021’s fuel prices which will see the retail cost of 95-octane gasoline will climb by almost 7%.

Higher average oil prices, a weaker rand and higher levies on petrol and diesel are behind the latest increase, the fourth in the past five months. The AA said that these increases would be disastrous for fuel users and consumers across the board.

“A perfect storm of demand imbalances, refinery costs, natural gas price hikes and rand weakness would see the petrol price close in on R20 a litre in the runup to Christmas.

“Diesel will be up by a remarkable R1.48 a litre, illuminating paraffin is set to jump by a staggering R1.45 a litre, and petrol will rise by R1.21 a litre for an inland price at the pumps of R19.54 for a litre of ULP95.”

The association said it will now push for answers on how the levies incorporated into the fuel price are being allocated and managed. It said the government must also clarify the additional slate levy that was imposed on the fuel price.

The slate levy has ballooned to R1.657 billion. At the current level, it is clearly insufficient to reduce the deficit and protect South African fuel users from the interest burden on this amount.

“The fuel price has a direct bearing on an already weak economy as it continues to drive up inflation on essential consumer goods and affects every South African. As we have said many times in the past, all the elements that comprise the fuel must be fully interrogated to determine if they are necessary.”

The AA said the forward-looking prognosis is grim.

“With oil demand buoyant and supply lagging, the ongoing issues with natural gas cost and supply, and refining costs a worry, we see little cause for optimism. Added to this is the volatile rand/US dollar exchange rate, and users of liquid fuels in South Africa are probably in for a rough ride in the next three to six months.”

Read: Here is the official petrol price for November

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It’s time to change how South Africa’s petrol price is calculated