Further substantial fuel price hikes are lined up for the end of October, based on the unaudited mid-month fuel price data released by the Central Energy Fund.
International oil prices remain stubbornly high and it is possible that current tensions involving Saudi Arabia, one of the world’s biggest oil producers, could place more pressure on fuel prices. More welcome news is that the Rand is working in South Africa’s favour, and the recent firming of our currency against the US Dollar has taken some of the bite out of oil’s rally.
However, the potential price hikes are still daunting, especially for diesel users. Petrol prices are currently set for a 40 cents perlitre increase, while diesel and illuminating paraffin could spike by 70 cents and 65 cents respectively.
The predicted increase of the price of petrol must, for the moment, be seen against the backdrop of the Department of Energy’s (DoE) proposal to set a maximum price for the sale of 93 octane ULP and LRP fuels. Should this happen, it will allow fuel retailers to set their own prices below the maximum amount indicated by the government and may, depending on the margins, ease the burden on users of the two identified fuels. The details on the possible implementation of the proposal is, however, still unclear.
The AA does, however, welcome government’s efforts on the issue of rising fuel prices, and the fact that the Department of Energy has requested input from industry stakeholders. It says the proposal looks to be consumer-friendly, and that the detail will clarify how this will work once all the feedback is received. The country cannot continue to be hammered by large fuel price hikes without severe economic knock-on effects.
The AA again calls on the government to prioritise economic policies which inspire investor confidence. A stronger and more stable Rand is the country’s only defence against the vagaries of the international oil price. – Press release
