Things are about to go from dire to nasty for South African motorists and commuters, with mid-month data from the Department of Energy indicating that yet another hefty fuel price hike seems inevitable for June.
Although it’s too early to make an exact prediction, a steep increase in the region of 70 cents is looking likely if you consider the following facts. We are currently more than halfway through the cycle that will determine June’s fuel price (25 April to 31 May) and the price data collected up to May 14, and averaged out, points towards a petrol price increase of 71 cents a litre and a diesel hike in the region of 79 c/l.
Should petrol increase by a further 70 cents a litre, motorists across the country will be paying more than R15 a litre for petrol - with inland prices rising to R15.67 for 95 Unleaded and R15.42 for 93 Unleaded, while those at the coast would find themselves paying R15.08 for a litre of 95.
These figures are due to a ‘perfect storm’ of rand weakness and rising international oil prices - adding insult to the injury of April’s 52 cents a litre fuel tax hike.
The local currency weakened sharply towards the end of April and that trend has continued through most of May, reaching its lowest level to the US dollar this year (R12.64) on May 4. There was some relief earlier this week, where it briefly dipped below R12.20, but the currency has since retreated to around the R12.40 mark.
Meanwhile, international oil prices have continued to surge, recently touching three-and-a-half-year highs, largely due to continued Opec production cuts and looming US sanctions after Donald Trump pulled the plug on the Iran nuclear deal.
Crude oil was trading at $78 a barrel on Tuesday morning, and many analysts are predicting an imminent break through the $80 mark.
As mentioned, government’s 2018 Budget added 52 cents to the cost of a litre of petrol or diesel from the beginning of April, through increases in the General Fuel Lexy (22 cents) and Road Accident Fund contribution (30c).
In fact levies currently makeup 38 percent of the fuel price, as was highlighted by the Automobile Association recently.
June’s price movements will follow the already crippling price hikes of May and April, cumulative increases of R1.18 for 93 Unleaded petrol and R1.23 for diesel.