Sharp fuel price hikes will hurt all South Africans – AA

The massive fuel price increases announced by the Department of Mineral Resources and Energy (DMRE) on Saturday will have a sharp and immediate effect on the poor, and a long-term impact on inflation.

The Automobile Association (AA) says these increases are above expectations.

Fuel price hikes

Impact on every South African

“For the first time in history, 95 octane petrol inland will rise above R21 a litre, and by a significant margin.

“As of Wednesday, this fuel will cost R21.60/l while at the coast it will cost R20.88/l, the first time it has breached the R20/l level.

“Significantly, the price of illuminating paraffin will also rise to new highs with this fuel costing R13.18/l inland and R12.36/l at the coast,” said the AA.

This fuel is used extensively in poorer communities for heating, cooking and lighting, and will be in higher demand as the country moves from a hot summer into more moderate autumn over the next few weeks.

“These increases will certainly impact on every single South African given the reliance the country has on fuels for transportation, manufacturing and in the agricultural sector,” noted the AA.

March fuel price increase

The increases for March are mainly attributable to rising international petroleum prices as a result of Russia’s invasion of Ukraine and would have been more severe had the Rand not stabilised against the US Dollar in the last few weeks.

The Rand showed positive movement against the US currency and shaved some negativity off the final adjusted prices.

The AA says the outlook for April remains unclear but Russia’s military action in Ukraine could push international oil prices higher which will again impact locally.

The Association notes that global volatility and the unfolding Russian attacks on Ukraine, with the response from the European Commission and its allies, doesn’t bode well for oil price stability.

“For now, it’s a question of wait and see how these prices move in the next few weeks.”

A ‘silver lining’

“One silver lining, though, is that any potential increases will not be combined with increases to fuel taxes,” said the AA.

Finance Minister Enoch Godongwana announced earlier this week that General Fuel and Road Accident Fund levies would not increase this year.

“This is good news, but must be tempered by what happens in the next few weeks to the overall pricing of fuel,” concludes the Association.

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