Brace yourself! A massive fuel hike is on the cards when the Department of Mineral Resources and Energy (DMRE) adjusts fuel prices for September.
Commenting on unaudited data from the Central Energy Fund (CEF), the Automobile Association (AA) said the hikes to petrol prices would be the highest since July last year, while the increases to diesel prices would be record hikes.
“According to the CEF’s data, the price of petrol is expected to climb by between R1.59/litre for ULP 93 and R1.65/l for ULP 95. The wholesale price of diesel is expected to increase by a whopping R2.85/l. Considering these potential increases, the price of a litre of ULP 95 inland will rise from R22.83 to R24.48/l while the price of ULP 93 will increase from R22.43/l to R24.02/l.
“Both these prices are in line with prices last seen in August last year but not at the record highs seen in July 2022,” the association said.
The AA says that in the case of diesel, the hikes will push the suggested wholesale cost from its current R20.21/l to R23.06/l, the highest it has been since December last year.
Illuminating paraffin prices are also slated to increase significantly, by as much as R2.80/l, which will push the cost of this fuel to R17.43/l inland and R16.50/l at the coast.
“The expected increases are largely being driven by higher international oil prices which have risen on the back of slow demand and decreased output. Reuters News Agency, for instance, yesterday reported that analysts expect that Saudi Arabia, the world’s biggest oil exporter, would extend its voluntary output cut into October, keeping oil supply tight and prices high.
“According to the CEF’s data, higher international oil prices are contributing between 80% and 88% to the expected increases, with the weaker rand/US dollar exchange rate contributing the rest,” the AA added.
The AA said while the rand had weakened on average against the greenback in August, this was not a major contributor to the expected increases – that falls squarely on rising international oil prices.
The increase in the fuel prices – especially of diesel – will have negative consequences for all consumers as higher input costs will be recovered through higher prices at the till.
“Motorists will certainly feel the pinch in terms of higher prices at the pumps, but consumers across the board can expect higher prices for all goods and services because of these hikes.
“In this environment we reiterate our advice to motorists that they should keep their vehicles in good mechanical condition and their tyres inflated according to manufacturer’s specifications to ensure optimal fuel usage.
“Avoiding heavy traffic, not overloading the vehicle, and minimising driving where possible are other measures to decrease fuel consumption,” it advised.