Possible petrol price shake-up for South Africa

Administration changes resulting from South Africa’s 2024 general elections could significantly impact fuel prices, according to Automobile Association spokesperson Layton Beard.

When asked whether new economic policy regarding fuel price add-ons could be introduced as a result of the election, Beard said that was a very difficult question to answer.

However, he noted that upcoming developments in South Africa’s political space could significantly impact the country’s economic and fuel price policies.

“There’s a lot that still has to happen over the coming weeks and months on our political front, and that is certainly going to have a major impact on the economic and financial fronts as well,” he said in an interview with Newzroom Afrika.

“From the AA’s point of view, we’ve asked for a review of the fuel price as far back as 2015. People are saying: let’s just take the levies off the fuel price and be done with it,” said Beard.

“Our concern with that is that levies that are taken off the fuel price, that money will just be gathered in another form, maybe through higher taxes or VAT.”

Beard said they are watching political developments with keen interest.

“I think it’s going to inform a lot in terms of what happens on the financial and fuel price fronts going forward,” he said.

Regarding South Africa’s fuel prices, a significant drop in the cost per litre is expected at the country’s pumps on Wednesday, 6 June 2024.

Fuel prices in South Africa this Wednesday are being adjusted as follows:

• Petrol 93 — Decrease of R1.24 a litre
• Petrol 95 — Decrease of R1.24 a litre
• Diesel 0.05% — Decrease of R1.19 a litre
• Diesel 0.005% — Decrease of R1.09 a litre

Beard said these price drops result from an overrecovery and a stronger average rand-dollar exchange rate in May.

“Some may look at the exchange rate and question: last week it was around R18.20, and this week it’s around R18.80; how is this possible?”

“These things are worked out on averages. So, you look at the period of May, and on average, the rand was stronger against the US dollar over the period.”

Beard says it is almost impossible to predict what will happen with South Africa’s fuel pricing in future.

MyBroadband spoke to Beard in February 2024 about the cause of the high fuel prices and the outlook for the year ahead.

He said the high fuel prices observed in January and February showed the impact of the Houthi attacks on fuel cargo ships and the weakened rand.

“The impact of the geopolitical risks and the attacks on oil cargo ships in that Red Sea stretch through the Suez is causing an increase in the Brent Crude oil price,” said Beard.

“International oil prices have gone up. That’s having an impact on petrol, diesel, and paraffin and, at the same time, on average, the rand depreciated against the US dollar.”

He said that while the rand didn’t depreciate significantly against the dollar, it was enough to impact fuel prices in the country.

“If your buying power has diminished and the cost of the product you are buying has become more expensive, that’s going to lead to what they call an under-recovery, and therefore, you’re going to pay more at the pump,” said Beard.

Beard said it is impossible to confidently predict if the monthly fuel price increase trend will continue in 2024.

“It’s impossible to say because we don’t know what’s going to happen in a week’s time, let alone in a month’s time,” said Beard.

“To say that we are definitely going to pay more for fuel in July, August, September, is impossible because we don’t know what external factors will influence both of those factors (Brent Crude oil price and the rand’s buying power).”