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If the latest December fuel price forecast is anything to go by, vehicle owners are unlikely to have a very merry time at the petrol and diesel pumps come next week Wednesday, 4 December.
This after the November increase in the cost of both petrol and diesel brought five consecutive months of price decreases to a screeching halt.
The glimmer of hope for at least a small cut in the price of 93 Unleaded petrol in December, is fading fast due to a weaker rand and global oil prices driving the current negative trend in petrol price recoveries.
95 Unleaded petrol has flipped from a small positive over-recovery this month into an under-recovery of around 3 cents per litre while 93 Unleaded is still showing an over-recovery of 10 cents per litre.
Diesel has been in under-recovery territory the whole month, with data pointing to a hike of around 47 cents per litre.
However, the latest projections from the Central Energy Fund’s (CEF) indicate that an under-recovery is developing for both grades of petrol.
A small consolation for motorists is that the price movements for 93 Unleaded petrol are almost certain to be minimal, and 95 Unleaded is still R1.26 cheaper than what it was in January 2024.
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Domestic fuel costs are primarily governed by the rand/dollar exchange rate and global oil prices.
The depreciation of the rand against the dollar and the surge in oil prices have flipped fuel price recoveries in the red this month.
According to BusinessTech, the weakened rand is currently having a negative influence to the tune of around 17 cents per litre on December’s fuel price equation.
The local currency has been on the back foot in November, breaking through the R18 per dollar barrier for the first time in three months on 12 November when the dollar soared following Donald Trump’s US election win.
In addition, the potential impact of a second Trump administration imposing higher trade tariffs has spooked emerging markets (EMs).
Global oil prices have spiked in November due to the ongoing conflict in the Middle East and an intensification in geopolitical tension after Russia fired intercontinental ballistic missiles at Ukraine.
At the time of writing on 27 November, Brent Crude oil stood at $73 per barrel with the rand trading at R18.15 against the dollar.
It is important to note that the CEF’s daily snapshots of the basic fuel price do not reflect various other factors, such as slate levy adjustments or retail margin changes whereby the controlled prices are adjusted by the Department of Mineral and Petroleum Resources
Within the total price of fuel domestically, taxes and levies make up 31%, with the general fuel levy (GFL) and Road Accident Fund (RAF) levy accounting for the largest portion.
The RAF levy amounts to R2.18 per litre of the price of petrol and diesel.
GFL, which is limited to about R3.96 per litre for petrol and R3.84 per litre of diesel as of April this year, is one of the government’s main sources of tax income, contributing R95 billion to the fiscus.
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