Households in South Africa could be in for some respite in the coming months as petrol prices are set to cool off slightly next week, according to the latest data from Central Energy Fund (CEF).
Month-end data from the Central Energy Fund CEF for 29 September 2022 shows that the petrol price could drop by R1 per litre next week when prices are adjusted on Wednesday (5 October). Diesel, however, is showing an under-recovery – thus a potential increase of 10 cents per litre.
The CEF’s data shows a petrol price drop of between 90 cents and 102 cents per litre, while diesel could climb between 10 cents and 15 cents per litre.
The Department of Energy has stressed that the daily snapshots are not predictive and do not cover other potential changes like slate levy adjustments or retail margin changes, which are determined by the department at the end of the month, taking all variables into account.
For example, slate levy adjustments could be made, eating into any potential savings.
The Automobile Association’s (AA) Layton Beard said that while the expected price changes for petrol are less than what was forecast mid-month, “it’s a decrease nonetheless”, which will hopefully bring the price of petrol below R23.
He noted that even at this level, prices will still be nowhere near the levels at which we were in December/January – before the Russian invasion of Ukraine – any decrease from here on out is a good thing.
Bad news for diesel
Unfortunately for those who rely on diesel, the CEF data shows an increase in the cards.
While it’s not a significant increase – 10-15 cents per litre – Beard said it is still an increase nevertheless and will have a noticeable impact on the agricultural, manufacturing, and road freight sectors.
He added that the increase in diesel is decelerating compared to previous increases, which is a positive.
Andre Botha, a senior dealer at financial consultancy TreasuryOne, said that this disparity between petrol and diesel lies in the ongoing conflict in Europe, which is pushing up global demand for diesel.
Should the crisis in the Eurozone continue and supply not increase from oil-producing countries, South Africa could see global demand for diesel drive prices up “for a while”, he said.
Botha said the key difference in the prices of diesel and petrol boils down to supply and demand.
“A lot of market players have bought diesel in the short term due to the lack of supply, as well as the current energy crisis in the Eurozone as the winter approaches,” he said.
“Diesel is used in generating electricity as well as being the preferred fuel for machinery for production. With the market scrambling for diesel surety, supply is king, and suppliers are selling diesel at a premium due to the high demand.”
Botha said that to curb high diesel prices, either a major change in the Russian conflict is needed or an increase in supply from other countries.
Warnings over higher diesel prices have been heard since the beginning of September, with the CEO of Debt Rescue, Neil Roets, saying that the increase in demand for diesel and subsequent price hikes will be passed onto consumers – not only in terms of filling one own car but also in the goods that are produced through diesel reliant manufacturing.