AA predicts around R2/litre fuel price drop in November

Motorists may soon have some reasons to smile ahead of the Festive Season, after the AA prevdicted the price of fuel may go down next month.

It cited the latest unaudited data from the Central Energy Fund (CEF), which found petrol could be coming down by around R2 a litre, while diesel could even see a cut of about R1per litre.

“After three months of significant increases both petrol and diesel prices are expected to fall below the R25/l mark again. This is good news for motorists, consumers, and the economy, especially heading into the end of the year.

“These decreases come as South Africans continue to struggle financially and will be welcome relief from the substantial increases seen since August. In July, a litre of ULP95 cost R22.46 (inland). Should the expected decrease materialise, the November price for a litre of ULP95 inland will cost around R23.68,” the AA said.

The association said it remained concerned about the overall high price of fuel.

“A sustainable solution to mitigating rising fuel costs is still necessary and until that solution is found, citizens will be at the mercy of fuel price hikes.”

The possibility of some relief at the pumps for Mzansi motorists comes on the back of October’s significant fuel price increase, which toppled the price of all fuel grades above an eye-watering R25/litre mark.

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November fuel prices: Expected changes (so far) in petrol, diesel and paraffin

• Petrol 93: decrease of 196 cents per litre (R1.96)
• Petrol 95: decrease of 201 cents per litre (R2.01)
• Diesel: decrease of 108 cents per litre (R1.08)
• Illuminating paraffin: decrease of 98 cents per litre

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Role of global oil prices, rand/dollar exchange

The CEF predictions are based on the average price of Brent crude oil throughout the month, paired with the current rand/dollar exchange rate.

The last time South African motorists were given a break from the ever-rising cost of petrol was way back in July. Diesel has seen cumulative hikes of R5.71 since June.

The biggest contributor to the current over-recovery (which equates to a decrease) in fuel prices are the costs associated with international petroleum products. This is mainly driven by the global oil price.

Oil is currently trading at $93 a barrel due to the Israel-Hamas conflict, which has caused oil prices to rise as trade routes and/or the supply of oil for export are interrupted.

Investec chief economist Annabel Bishop, however, said the average price to date in October of around $88 a barrel for Brent crude oil is still lower than the $92 a barrel for the same period in September.

In her oil focus update, she said this points to a R2/litre cut in the petrol price building for early November, with close to a 90c/litre drop in the diesel price.

“Oil prices climbed after the advent of the Israel-Hamas war, from US$84/bbl to US$92/bbl. The average for the month in the rand oil price influences the cost of imported petroleum product goods and hence SA’s fuel prices,” Bishop explained.

Although our currency has been trading at around R19 to the greenback, economists expect a relatively stable environment until the end of the year, according to BusinessTech.

The latest rand/dollar exchange as of 24 October stood at R19,03 to the dollar.

DOE adds the ‘final touches’ to fuel price

The Department of Energy (DOE) has the final say in the country’s official fuel pricing.

It looks at all the same factors the CEF does, but then, sadly for motorists, it considers various factors, such as slate levy adjustments or retail margin changes, whereby the controlled prices are adjusted on the first Wednesday of each month.

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Fuel price taxes and levies

In its analysis of the fuel price trend in 2023, FNB explained that within the total price of fuel domestically, taxes and levies make up 31%, with the general fuel levy and Road Accident Fund (RAF) levy accounting for the largest portion.

Government receives a revenue of R95 billion from the general fuel levy, which is used to fund public services.

Speaking to Newzroom Afrika last month, the People Against Petrol and Paraffin Price Increase’s (PAPPI’s) Visvin Reddy said the government could consider other alternatives 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,” said Reddy.

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

• The final overall price changes for both petrol and diesel will be confirmed on Monday, 30 October with the new prices implemented as from Wednesday, 1 November.

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