February fuel price LATEST: Even bigger hike in petrol, diesel could hit the pumps

Wondering what to do for Valentine’s Day this year? Well, the old saying of “taking your girlfriend on an expensive date to the filling station”, might just be the sad reality with February petrol and diesel prices continuing to climb.

Mzansi motorists have a weaker rand and rising global oil prices due to Red Sea tensions to blame for the prospect of getting even less revs for their buck at the pumps in comparison to projected price hikes earlier this month.

February fuel price: Expected changes for petrol and diesel

Month-end data from the Central Energy Fund (CEF) currently points to an under-recovery of between 52 and 54 cents per litre for petrol, while diesel – in tandem with petrol – are lining up for a 47 to 51 cents per litre.

The latest projected changes are in stark contrast to mid-month data which indicated a possible increase of nine to 14 cents per litre.

Worst-case scenario

A rather unsettling factor in play at the moment, is an upwards shift in under-recovery of about six cents per day.

This could translate in a worst-case scenario of petrol and diesel both climbing towards the 80 cent mark when the Department of Mineral Resources and Energy (DMRE) announces the official changes for next week.

Nothing is set in stone at this stage, however, and hopefully Mzansi motorists will be spared from suffering such a severe blow on top of the crippling cost-of-living crisis gripping the country.

Rand/dollar and global oil prices the main drivers of SA fuel price

Fuel prices are primarily determined by the price of oil and the rand/dollar exchange rate.

According to the online publication Economies.com, global oil prices rose by more than 1% on Thursday following an OPEC+ ministerial meeting.

At the time of writing, on 1 February, the international price of Brent Crude oil rose by 1.1% to $81.41. (after starting off the year at about $75 a barrel).

Oil prices rose 5.5% on average in January amid the escalating geopolitical tensions of the Gaza war and US-led strikes against Iran-backed Houthis in Yemen.

The turmoil in the Middle East has dashed all hopes for an increase in supply due to an expansion of producers outside OPEC during 2024.

• At the time of writing, on 1 February, the international price of Brent Crude oil rose by 1.1% to $81.41. (after starting off the year at about $75 a barrel).
• The rand was trading at R18.72 to the US dollar, a welcome improvement from trading at an alarming R19.20 against the greenback at the beginning of last week.

Who has the last say on fuel price?

The DMRE has previously stressed 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.

Budget Speech: Will SA be spared a hike in fuel tax?

It is estimated that the South African government receives a revenue of R95 billion from the General Fuel Levy, which is used to fund public services.

The General Fuel Levy stands at R3.95, which is 18% of the retail price. This while the Road Accident Fund’s (RAF) R2.18 roughly translates to 10% of the current price. 

On 21 February, Finance Minister Enoch Godongwana will announce the state’s budget as it struggles to balance its finances.

In his Medium-Term Budget Policy Statement (MTBPS), Godongwana said the country’s main budget deficit increased by R54.7 billion compared to 2023 Budget estimates.

At the time, the minister added that the National Treasury will look to raise R15 billion in additional taxes in 2024 as the country looks for avenues to increase revenue.

ALSO READ: MTBPS: the scary and worrying parts

His announcement raised concerns in economic circles that this could result in an increase of fuel taxes.

Deloitte SA’s senior associate director of transfer pricing, Billy Joubert, however, told BusinessTech that an increase in the General Fuel Levy and Road Accident Fund Levy in the 2024 Budget is “unlikely” to become a reality.

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 could consider other alternatives to the General Fuel Levy and 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,” 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 official fuel price adjustments will come into effect on Wednesday, 7 February.