PAIN AT THE PUMP
SA faces further financial strain when massive fuel price hikes kick in after midnight
Expect to pay more than R1/litre for petrol and almost R2/litre more for diesel today. The fuel price has risen sharply overnight.
The Department of Mineral Resources and Energy (DMRE) has announced a fuel price “adjustment” that took effect at midnight last night, blaming a range of local and international factors — mainly related to the price of crude oil, the rand-dollar exchange rate and the Slate Levy.
In a media statement, the DMRE said the inland fuel prices for October 2023 have increased as follows:
- Petrol (93 ULP and LRP): R1,08/l
- Petrol (95 ULP and LRP): R1,14/l
- Diesel (0.05% sulphur): R1,96.70/l
- Diesel (0.005% sulphur): R1,93.70/l
- Illuminating paraffin (wholesale): R1,51/l
- The Single Maximum National Retail price (SMNRP) for IP: R2,02/l
- Maximum LPGas Retail Price: R2,50/kg
The latest price hike takes the price of ULP95 petrol above R25/litre in Gauteng and above R24/litre on the coast — the first time since August 2022.
The DMRE cited the following reasons:
Crude oil price: The average price of Brent Crude oil increased from $84.78 to $91.86 during the period under review, mainly because of tightening supply due to production curbs by Saudi Arabia and Russia.
The international crude benchmark Brent has risen by almost 30% to skirting $100 a barrel since the start of June. Bloomberg reported yesterday that oil has rallied since mid-June after the Organization of Petroleum Exporting Countries (Opec) and its allies curbed crude supplies, Russia banned exports of diesel, and crude stockpiles plunged at the vital hub in Cushing, Oklahoma. The upsurge — which has also been supported by robust demand — has rekindled speculation that $100-a-barrel pricing may return.
International petroleum product prices increased during the period under review due to high prices of petrol due to refinery shutdowns in the US; a global shortage of diesel, due to autumn refinery maintenance and reduced exports from Russia; and higher prices of propane and butane, plus higher freight costs.
Rand-dollar exchange rate: The rand has depreciated from R18,67/$ to R19/$ during the period under review, contributing 24.17c/l, 26.98c/l and 26.59c/l hikes in the prices of petrol, diesel and illuminating paraffin, respectively.
The Slate Levy: The basic fuel prices (BFP) of petrol, diesel and illuminating paraffin are calculated on a daily basis — if the BFP is lower or higher than reflected in fuel price structures, the under- or over-recovery means fuel consumers are either paying too little or too much for the product. The levy is effectively a self-adjusting mechanism that the government uses to deal with daily variations in petrol prices.
The DMRE said the cumulative slate balance on petrol and diesel at the end of August 2023 had a negative balance of R3.5-million, so it will implement a slate levy of 30.70 cents per litre.
The fuel price increases far exceed that forecast on 29 September by the AA, when it noted diesel was expected to increase by around R1,60/litre; petrol by between 75c/l and 80c/l depending on the grade; and illuminating paraffin is expected to rise by more R1,50/l.
It is the fourth consecutive increase in the price of diesel, warned the AA at the time in a press statement. “These increases are going to hit all consumers hard, and they come at a time when most South Africans are feeling extreme financial pressure. It remains concerning, however, that in the face of these increases, (the) government remains silent on its plans, if there are any, on a way forward to deal more effectively with fuel price increases.”
The AA again advised motorists to maintain their vehicles and inflate their tyres to manufacturer’s specifications to ensure optimal fuel usage. “Minimising trips where possible, using air conditioners sparingly, and not overloading the vehicle are other measures owners can take to decrease fuel consumption.” DM