It is debatable that perhaps, the one silver lining – if any, of the Covid pandemic hitting South African shores was the plummeting of fuel prices. As the value of oil dropped drastically around the world due to less demand, so did petrol and diesel prices.
In April 2020, South Africa experienced a record decrease in fuel prices with a liter of petrol going for as a little as R13.76 cents.
The cheap fuel fantasy was short-lived however, On Monday, 4 January 2021, Minister of Mineral Resources and Energy, Gwede Mantashe, announced fuel price increases that came into effect as of 6 January 2021. The increase saw petrol, going up by 43 cents, with diesel and illuminating paraffin each going up by 55 cents. According to the AA, South African motorists are likely to dig even deeper into their pockets in 2021.
“With the Rand relatively strong by recent standards, the only hope for a reprieve relies on a pullback by oil. Unfortunately, the trend lines suggest that the situation may deteriorate further before month-end,” the AA said on Friday.
The Association was commenting on the unaudited mid-month fuel price data released by the Central Energy Fund. According to the data: petrol looks bound to increase by a heart-sinking 80 cents a liter, while diesel is set for a climb up to around 61 cents a liter, with illuminating paraffin to go up by 63 cents.
The AA said that if the situation remained unchanged, the South African economy would be headed down a dark and expensive road.
“The problem is international oil prices, which have been consistently climbing with each passing day,” AA pointed out.
“A general increase in positive sentiment as COVID-19 vaccines are rolled out has combined with upticks in global economic activity, pushing up oil demand – and taking prices with it.”
With some having pointed at the Rand as the major culprit, the AA has, however, rebuffed the suggestion.
“Despite some wild swings in the daily exchange rate, and the average rate creeping up from around R14.60 to just over R15.00, only four cents of the substantial predicted increases come from Rand weakness,” the AA said.
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