CAPE TOWN – The Automobile Association (AA) on Monday predicted further substantial fuel hikes at the end of October, just a month after South Africa experienced catastrophic hikes pushing fuel prices to an all-time high.
Commenting on unaudited mid-month fuel price data released by the Central Energy Fund the AA said: “International oil prices remain stubbornly high and it is possible that current tensions involving Saudi Arabia, one of the world’s biggest oil producers, could place more pressure on fuel prices. More welcome news is that the rand is working in South African's favour, and the recent firming of our currency against the US dollar has taken some of the bite out of oil's rally.”
The Saudi-US diplomatic clash over the disappearance of journalist Jamal Khashoggi is stirring memories of the most traumatic event in the history of oil.
Crude prices jumped this morning, according to Bloomberg, after Saudi Arabia vowed to hit back at any punitive measures against it following a White House warning that President Donald Trump may take “stern action” should the kingdom be found responsible for Khashoggi’s demise.
Petrol prices are set for a 40c/l increase, while diesel and illuminating paraffin is expected to spike by 70c and 65c respectively.
The AA said the predicted increase to the price of petrol must, for the moment, be seen against the backdrop of the Department of Energy’s proposal to set a maximum price for the sale of 93 octane ULP and LRP fuels.
“Should this happen, it will allow fuel retailers to set their own prices below the maximum amount indicated by government, and may, depending on the margins, ease the burden on users of the two identified fuels. It must be stressed, however, that we did not participate in the drafting of the proposal, so details on its possible implementation remain unclear to us,” the AA said.
The AA said the last fuel price hike would extract R2.5 billion a month in transport costs from an economy that was already on the ropes. It said excluding months where fuel taxes were hiked, this was the largest single fuel price increase the country had ever experienced.
The AA welcomed the government’s efforts on the issue of rising fuel prices, and that the Department of Energy had requested input from industry stakeholders. It said the proposal looked to be consumer-friendly, and that the detail would clarify how this would work once all the feedback was received.