Fuel price latest: Petrol set to breach R25/litre mark in May

Mid-month data is still pointing to mixed fortunes for fuel prices in May. While the over-recovery for diesel persists, the opposite is true on the petrol front with an even bigger increase than last week’s prediction on the horizon.

South African fuel prices have reached record-high increases over the past three years despite the government not increasing the General Fuel Levy or Road Accident Fund (RAF) levy.

This year, petrol prices have increased by a R1.80 so far, with hikes in February, March (a crippling R1.21) and April. 

May fuel price: Petrol, diesel and illuminating paraffin

According to mid-month data from the Central Energy Fund (CEF), the price of unleaded 93 petrol inland will again increase by 37c/litre in May, pushing the price close to R25.15/litre.

The outlook for unleaded 95 inland is not much better with the CEF data showing an increase of 38c/litre.

This will push the price of this fuel to around R25.50/litre, higher than the R25.42 seen in August 2022, but not quite the record price of R26.74 in July 2022.

Despite the disheartening news of more petrol pain at the pumps, diesel is set to decrease by 35c/ litre while illuminating paraffin could come down by 28c per litre.

Drop in diesel good news for consumers

Commenting on the latest fuel price data, the Automobile Association (AA) welcomed the decrease to diesel prices.

“The decrease will be especially welcome as it will not result in higher input costs across various sectors, and this won’t be a driving factor in consumer prices increasing.”

ALSO READ: Govt’s diesel rebate faces scrutiny as manufacturers find costs outweighing benefits

Main factors: Rand/dollar, global oil prices

Fuel prices are adjusted on the first Wednesday of a month and are primarily determined by the international price of oil and the rand/dollar exchange rate.

The rising price of global oil is undercutting the relative stability of the rand against the US dollar and the main driver of the expected increases.

“However, with tensions ramping up in the Middle East, the local currency could be under significant pressure going into the last two weeks of April and could have a more significant impact on local fuel prices in May,” the AA warned.

At this stage it’s important to keep an eye on that indicator as we head into the new month.

• At the time of writing on 17 April, the rand was trading at R18.95 against the US dollar
• The price of Brent Crude Oil stood at $89.62 per barrel.

AA calls for review of fuel price structure

The AA said that the expected increases reaffirm its belief that a review of the fuel price structure is necessary to establish if any components within the current pricing model can be revised by the Department of Mineral Resources and Energy (DMRE) to mitigate against rising costs.

PAPPI argues its within government’s power to reduce petrol price

Speaking to Newzroom Afrika in September last year, the People Against Petrol and Paraffin Price Increase’s (PAPPI) Visvin Reddy said the government should consider other alternatives to the General Fuel Levy and Road Accident Fund (RAF) Levy to maintain its finances.

That R95 billion doesn’t need to come from motorists and fuels. It can come from a special tax on the monopoly industry that sits on the JSE.

“Take that R95 billion from a special tax on those companies, and immediately reduce the price of petrol in this country by 35%,” Reddy argued

DMRE disclaimer

According to the DMRE, the unaudited daily CEF snapshots are not predictive and do not cover other potential changes like slate levy adjustments or retail margin changes, which could come into play when the fuel price is determined on the 25th of April.

• The official fuel price adjustments will come into effect on Wednesday, 1 May.

Stay tuned to The Citizen for more fuel price updates towards the end of this month.