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Tue Sep 02 03:58:36 SAST 2014

Fuel price to break R13/l ceiling

TJ STRYDOM | 22 February, 2013 00:532 Comments
Petrol pump. File photo
Image by: ERIC GAILLARD / REUTERS

Motorists are in for massive hikes in the fuel price if the rand exchange rate and the oil price stay at their current levels.

The first Wednesday of next month could see the petrol price break through R13/litre, making it 20% more expensive than six months ago.

This comes as Eskom's application for a 16% electricity price increase is still on the table and consumers, who are already feeling the pinch, are likely to start coughing up for Gauteng's road improvements soon.

On 95 octane petrol, the average underrecovery - usually a good indication of the Department of Energy's monthly fuel price adjustments - is nearly 86c so far this month, according to a daily update from the Central Energy Fund.

With 95 octane currently selling for R12.27 in Gauteng, the next adjustment, to be announced next week, could push the price up to R13.13 a litre.

On 93 octane, the average underrecovery was 85c and on diesel it was 62c, hinting at price increases of that order. And relief could be a long way off.

The oil price is the primary cause for the probable increase, contributing more than 70c to the underrecovery so far this month.

Brent crude oil was trading at $113/barrel yesterday. And industry experts don't see it coming down soon.

A lower oil price and firm rand brought motorists some relief in the middle of last year, when it reined the price back from R12.22 to R10.82 within two months.

But economists don't see South Africa's currency strengthening in the months ahead.

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