Motorists could face a painful month at the pumps in April as surging global oil prices, a weaker rand and looming tax increases push fuel costs higher.
Escalating tensions in the Middle East have driven crude prices upward, with Brent crude trading at about $89.69 (R1,464) a barrel at the time of writing, while South Africa’s reliance on imported fuel leaves it exposed to the global shocks.
At the same time, a softer local currency, trading at around R16.31 to the dollar at the time of writing, is making oil purchases more expensive and planned increases to fuel levies are set to add further pressure on the price motorists pay.
Adding to the strain on consumers, finance minister Enoch Godongwana announced a 21c/l increase in the general fuel levy during his recent budget speech. The increase will come into effect in April and form part of the next fuel price adjustment.
According to the latest daily fuel price data published by the Central Energy Fund (CEF), the price of 93-octane petrol is on track to increase by around R3.27 per litre, while 95-octane petrol could rise by about R3.52/l. Diesel users could be hit even harder, with the wholesale price of 50ppm diesel projected to climb by R6.02/l and 500ppm diesel by about R5.09/l.
Sharp increases at the pumps therefore tend to push up public transport fares and food prices as higher fuel bills raise the cost of moving products from farms and factories to shops and households
If the projections hold, motorists will pay about R23.67/l for 93-octane petrol and R24.03/l for 95-octane inland (R23.20/ coastal). The wholesale price of 50ppm diesel could reach R24.83/l inland (R24.07/l coastal), while 500ppm diesel may rise to about R23.83/l (R23.00/l coastal).
Higher fuel prices are likely to ripple through the broader economy. Diesel powers much of South Africa’s freight and agricultural transport, while petrol and diesel are widely used by taxis, buses and delivery fleets.
Sharp increases at the pumps therefore tend to push up public transport fares and food prices as higher fuel bills raise the cost of moving products from farms and factories to shops and households.
Despite the sharp increases currently indicated, the projections could change before the end of the month as oil prices and the rand-dollar exchange rate continue to fluctuate.
The final adjustments will be confirmed by the department of mineral resources and energy at the end of March, with the official April fuel prices set to take effect on April 1.
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