The “shock” announcement on Friday that motorists will pay 93c a litre more for 95 Octane, as from Wednesday, will add 0.3 percentage points to the monthly rate of inflation in September, according to Kevin Lings, the chief economist at Stanlib. The latest move followed a 22c a litre increase last month.
The petrol price is adjusted each month, in line with changes to a basket of international oil products.
The average daily under-recovery was running at less than 90c between July 27 and last Thursday, largely as a result of a rise in international crude oil and oil product prices, as well as a slightly weaker rand in the period.
In addition, the retail margin on all grades of petrol was hiked by 3.5c a litre to allow service station operators to finance wage increases for pump attendants and cashiers – as agreed at the Motor Industry Bargaining Council in September 2010.
Consumer inflation was 4.9 percent in July, according to Statistics SA, continuing a downward trend after fuel and food prices declined earlier in the year.
But that situation has reversed. As the impact of rising oil prices on global markets over the past few weeks continues to feed through to domestic costs, the Department of Energy announced the price of petrol would rise to R11.97 in Gauteng and R11.62 at the coast.
The price hike will hit the transportation industry, among others. Mango chief executive Nico Bezuidenhout said: “Airlines, as large consumers of fuel are particularly impacted by high crude oil prices as it represents between 30 percent and 40 percent of operational input cost, depending on the age of the fleet. Along with the added pressure on consumer disposable income and an already depressed market [higher prices] will squeeze aviation margins further.”
The domestic petrol price peaked at R12.22 a litre in May but was cut two months in a row when the oil price fell. However, crude oil prices are now on a rising trend. The benchmark Brent blend crude oil price, which fell from a peak of more than $126 a barrel on March 13 to below $90 (R1 057) on June 21, took off again.
Whether South Africans will continue to face price hikes depends on events outside the country. Stimulus measures by the US Federal Reserve and the European Central Bank could see the oil price soar.
Sapa-AFP reported that crude oil prices surged on Friday, “lifted by a weaker dollar on remarks by Fed chief Ben Bernanke and by a slow return of Gulf of Mexico production after Hurricane Isaac”. In London, Brent North Sea crude for delivery in October closed at $114.57 a barrel, up $1.92 from Thursday’s close”.