May fuel outlook’s highs and lows

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

Commenting on unaudited data from the Central Energy Fund (Cef), the Automobile Association (AA) says unleaded 93 petrol inland in May 2022 cost R21.51 per litre but increased to R23.01 in May 2023.

According to current data from the Cef, this price will again increase by 37 cents per litre in May, pushing the price close to R25.15 cents per litre.

The outlook for unleaded 95 inland is not much better, with Cef data showing an increase of 38 cents per litre. This will push the price of this fuel to around R25.50 cents per litre, which is higher than the R25.42 seen in August 2022, but not quite the record price of R26.74 in July that year.

Despite this bad news, diesel is set to decrease by 35 cents per litre, while illuminating paraffin is also set to come down by 28 cents per litre.

“The decrease in diesel prices is 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,” notes the AA.

A review of the data shows that the expectant increases in this cycle are a result of fluctuations in international product prices that took a sharp upward trajectory at the beginning of the month. The relative stability of the rand against the US dollar in the early part of the month is contributing only a small margin to 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. At this stage, it’s important to keep an eye on that indicator as we head into the new month,” says the AA.

The AA says 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 to mitigate against rising costs.