June launch of carbon tax adds to gloomy outlook for motorists

Introduction of carbon tax and unpredictable rand/US dollar exchange rate will keep motorists on an economic knife-edge

28 May 2019 - 12:43 By AASA and Motoring Reporter
Various local and international factors will affect June's fuel prices.
Various local and international factors will affect June's fuel prices.
Image: Theo Jeptha

Variable international oil prices and an equally unpredictable rand/US dollar exchange rate have combined to provide a mixed picture for fuel prices in June. This is according to an Automobile Association (AA), quoting unaudited month-end data released by the Central Energy Fund.

"International oil prices have been up and down in May. The basic petrol price has traded between 740c and 780c a litre, which averages out 19c lower for the month," the AA says.

The rand was also variable, although it traded in a fairly restricted range between roughly R14.15 and R14.60 to the US dollar.

"The rand was about 12c weaker over the month," the association said.

"This means that petrol prices will still drop by about 10c a litre. However, the basic diesel price increased slightly, by 2c a litre, so diesel users are looking at an increase of about 14c a litre, with a 9c hike for illuminating paraffin."

However, the AA says the overall picture may look a little different with the introduction of the carbon tax in June. This will add 9c a litre to the petrol price and 10c to the diesel price.

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"In effect this means that petrol will decrease by only 1c a litre, while diesel will increase more significantly by around 24c a litre," notes the AA.

The association says any number of current issues could affect the fuel price in the second half of the year and advises against relying on fuel price stability in the short to medium term.

"We suspect there may be more economic storms ahead," it concludes.