Motoring

March fuel price: Wake up and smell another big hike in petrol and diesel at the pumps?

Mzansi motorists might be in for back-to-back months of big petrol and diesel price hikes if early predictions for March become a reality when the official fuel prices are announced next month.

The dismal forecast follows hot on the heels of this Wednesday’s February hike in the price of both petrol and diesel.

The price of petrol is now alarmingly inching closer to R25 per litre, taking us back to October last year, when prices peaked at an eyewatering R25.86 per litre.

ALSO READ: Petrol price increase erodes what is left in consumers’ pockets

February fuel price pain at the pumps

Petrol

The latest petrol increase of 75c per litre translates into motorists now having to cough up:

R22.92/l for 93 and R23.24/l for 95 petrol inland; and
R22,20/l for 93 and R22.52/l for 95 at the coast.

Diesel

The price of diesel (0.05% sulphur) increased by 73c per litre, with 0.005% sulphur climbing 70c per litre.

March fuel price: Expected changes for petrol and diesel

According to early data from the Central Energy Fund (CEF), fuel prices are currently showing a rather sizeable under-recovery of between:

R1.47 and R1.54 for petrol; and
R1.49 and R1.58 for diesel.

The higher fuel prices of February—and possibly March—are expected to push inflation higher, dashing hopes for any interest rate relief in the near future.

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

Crucial factors: Rand/dollar, oil prices

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

Both a weaker rand and a higher global oil price are contributing factors to the continuation of the under-recovery trajectory, which kicked off last month.

According to BusinessTech, the global oil price, however, remains the main factor driving the current under-recovery.

This is due to geopolitical tensions, such as US-led strikes against the Yemeni militant group of Houthis in the southern Red Sea as well as in Iran.

The ongoing Gaza war between Israel and Hamas has also unsettled Middle East markets and the prospects of an increase in supply due to an expansion of producers outside OPEC during 2024.

At the time of writing on 9 February, the rand was trading at R18.81 to the US dollar and the price of Brent Crude Oil per barrel fluctuating near the $82 mark.

Who has the last say on fuel prices?

The Department of Mineral Resources and Energy (DMRE) has made a point in the past of reminding consumers that the 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.