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Another fuel price hike looms for November

| Economic factors

South African motorists, already reeling under the pressure of record fuel prices, are likely to face even more pain at the pumps from the beginning of November.

According to the Automobile Association, unaudited mid-month data from the Central Energy Fund is pointing towards increases of around 40 cents a litre for petrol and 70 cents a litre for diesel, while illuminating paraffin could go up by around 68 cents.

However there is reason to remain cautiously optimistic, as current rand strength is eating into the current fuel price under-recovery caused by a strong oil price and the aforementioned increase amounts could reduce significantly should the trend continue.

However, any increase whatsoever would be difficult for South Africans to absorb, given that fuel prices are already at record highs, with 93 Unleaded retailing at R16.85 in Gauteng and 95 Unleaded at R17.08, with those at the coast paying R16.49. Petrol prices have increased by R2.65 a litre since January, and diesel by R2.91.

This lends a sense of urgency to the Department of Energy’s proposal to set a maximum price for 93 Unleaded and LRP fuels in South Africa.

This, according to the AA, would allow fuel retailers to set their own prices below the maximum amount indicated by government, although details on the proposed price cap are limited at this stage.

Even so, this would not affect diesel prices (which are currently deregulated) and the projected 70 cent increase would certainly have an effect on general inflation given that practically everything has to be transported by a diesel-powered truck.

Little relief is on the horizon, with international oil prices remaining stubbornly high and the AA further warns that current tensions between the US and Saudi Arabia, which is one of the world’s biggest oil producers, could place more pressure on prices.

IOL Motoring

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