Motorists pay for rising cost of oil
Kristen Van Schie
A RISING oil price and a weakening rand are part of the reason why South Africans will be coughing up an extra 81c per litre to fill their tanks today.
The Department of Energy (DOE) has fingered the average price of Brent crude oil, which jumped from $112 to $119 per barrel during the fuel review period over February.
This was down to oil-producing countries cutting back on production near the end of last year, just as demand for oil and petroleum products rose in China and during the winter in Europe and the US.
A weakening rand – which dropped to R8.91 against the dollar during the price review period – had added fuel to the pricing fire.
“The cost of imported oil increased by 7 percent over the review period, and now we have to pay for it,” explained Econometrix chief economist Dr Azar Jammine.
Together, these factors had bumped up the basic fuel price (BFP) by nearly 77c.
The last 4 cents were a local addition from a rising slate levy – used to compensate for the day-to-day changes of the BFP.
“Obviously in those industries where petrol is a substantial cost, like the taxi industry, there may be some price increases,” said Jammine.
It was not great news for already cash-strapped households, said SA National Consumer Union vice-chairman Dr Clif Johnston, who called the outlook “dismal for consumers”.
“It’s a hard time at the moment,” he said. “All prices are going up, not just fuel.”
Next month, wallets will take another big knock when the rising fuel and Road Accident Fund levies will together add another 23c to a litre.
But the DOE says oil prices are beginning to show a “moderate downward trend, which bodes well for future prices”.
“Just as the oil prices rose before, we’ve seen them drop quite a bit recently,” said Jammine. “The decline might be more than enough to compensate for the increasing levies.”