How much the petrol price has changed in South Africa in 2022
Increases in the domestic price of fuel have been big news in South Africa throughout 2022, and motorists have been forking out more than R20 per litre of fuel for the majority of the year – with the most expensive month being July as petrol and diesel prices reached close to R27 and R26 per litre, respectively.
The main underlying reason for the price increases, and will continue to be, is movements in the international price of crude oil. At the same time, another important contributing factor is the fuel levies South Africans pay per litre.
As of 7 December 2022, inland 95 octane petrol costs R23.46/litre, while 0.05% sulphur diesel costs R23.92/litre.
South Africans with petrol vehicles are now paying R3.85 (19.6%) more for a litre of petrol, while diesel motorists are spending a significant R6.68 (38.7%) more for a litre since the start of the year when the price of 95 petrol was R19.61, and diesel was R17.24.
The most expensive month for petrol users was July, costing R26.74/litre at the pumps. For diesel users, the most costly month was November, costing R25.48/litre – which was only 8 cents more expensive than the price seen in July.
The petrol and diesel prices throughout 2022 are shown in the graph below.
Reasons for the price increase in 2022
The underlying reason for the price increases is movements in the international price of crude oil, which accelerated after Russia invaded Ukraine in February 2022, said University of the Witwatersrand professor Jannie Rossouw.
This created a massive shortfall in crude oil supply worldwide, leading to the price exceeding $120 per barrel in June 2022 – which resulted in the peak price of petrol in July.
However, Rossouw noted that the price per barrel in June was not the highest level ever for the crude oil price. The highest-ever nominal historic level of $147.02 per barrel was reached on 11 July 2008. On that occasion, crude oil prices increased due to military tension concerning Iran.
Adjusted for inflation since 2008, this amounts to some $200 per dollar in current values. This led to many experts forecasting further room for increases in the price of crude oil, with some speculating the prices of petrol could reach as much as R30 or even R40 per litre over the course of 2022.
However, in light of the war and global crude oil shortage, the Organization of Petroleum Exporting Countries and its allies (OPEC+) agreed to steady the global oil supply, supplementing the world market with oil reserves as a result of overproduction in 2021, said Bloomberg.
According to Rossouw, another contributing factor aimed at mitigating the rise of petrol prices in 2022 was when the South African government temporarily reduced the fuel levy between April and August, which gave South Africans some reprieve from the soaring prices.
Regarding diesel, like petrol, the price is also highly affected by international oil prices, which explains why they almost always fluctuate together. However, according to TreasuryOne, these factors are not playing a major role in diesel price dominance, which peaked in November 2022 at R25.48/litre.
Diesel’s stubbornness to stay above the R23 mark is not so much the input costs but rather the simple rule of supply and demand, said TreasuryOne.
Due to the Russia-Ukraine war and the Eurozone approaching winter months, many market participants have been stockpiling diesel for machinery, home heating, and emergency supply.
Diesel also occupies a smaller portion of the market as most vehicles worldwide use petrol.
This, in turn, has kept diesel prices from dropping considerably over September, October, and November, while petrol did not experience the same price stickiness, added TreasuryOne.
Fuel levies
Once the domestic base price for fuel is determined by the international price of crude oil and the rands exchange rate, a variety of levies, taxes and margins are added to calculate the pump price the consumer pays.
The most important is the government’s fuel levy (about 20% of the retail price) and the road accident fund levy (about 11%). These levies apply to both petrol and diesel, said Rossouw.
Another necessary levy is the gross margin allowed for filling station operators. This levy amounts to some 10% of the retail price of petrol, while it is determined through retail price setting per service station in the case of diesel sales. Filling station operators determine their gross margin on their diesel sales, as only the wholesale price is regulated.
The breakdown of these levies, taxes and margins for December 2022 is given in the table below, as outlined by the Department of Mineral Resources and Energy.
| Cost | 95 Petrol (per litre) | 0.05% Desiel (per litre) |
|---|---|---|
| General Fuel Levy | R3.94 | R3.80 |
| Road Accident Fund Levy | R2.18 | R2.18 |
| Wholesale/Retail Margins, Distribution Costs | R4.12 | R1.97 |
| Slate Levy | 83.28 cents | 83.28 cents |
| Basic Fuel Price | R12.34 | R15.08 |
On average, 33.5% of the price South Africans pay for a litre of fuel is taxes and levies. According to the figures above, as of 7 December 2022, South African motorists are paying around 30% tax per litre of fuel – R6.95 for petrol and R6.81 for diesel.
The table also shows that a large chunk of the price of petrol results from wholesale and retail margins and distribution costs, while diesel is still heavily impacted by the fuel’s base price – which accounts for 63% of the total cost price per litre.
Unfortunately, any reductions of some portion of the fuel (tax) levy – such as the reduction seen in April 2022 – cannot be done permanently, given the government’s precarious financial position. Any permanent decrease in the government’s fuel levy will necessitate an increase in other taxes raised by the government, said Rossouw.
This also extends to the wholesale and retail margins and distribution costs, as this accounts for the remuneration of pump attendants and other administrative staff members at filling stations. The retail levy also provides for site rental of filling stations in instances where the operators do not own sites.
Regarding petrol, the retail levy is R2.41. After the deduction of the rental allowance of 75 cents per litre and the allowance of 87 cents per litre for staff costs, site operators are left with 79 cents per litre, noted Rossouw.
He added that this 79 cents is their gross revenue and is used to cover other costs such as municipal services, bank charges, other overheads and professional fees. Whatever remains is the net income of the fuel station operator.
The petrol and diesel levies, taxes and margins in their entirety for 2022 are given below – sourced from the Department of Mineral Resources and Energy.
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