3 Reasons why fuel is increasing in March
Durban - Fuel prices increase because of the rand-dollar exchange rate, crude oil prices and import prices of Petroleum Products.
Jeff Radebe, the South African minister of Energy, said the adjustment of fuel prices will take effect from Wednesday.
He said SA fuel prices are adjusted on a monthly basis, informed by international and local factors. International factors include the fact that South Africa imports both crude oil and finished products at a price set at the international level, including importation costs, e.g. shipping costs.
Radebe said the main reasons for the fuel price adjustments are due to:
(1) The contribution of the Rand/US Dollar exchange rate
The Rand appreciated, on average, against the US Dollar (from 13.94 to 13.80
Rand per USD) during the period under review when compared to the previous
one. This lowered the contribution to the Basic Fuel Prices of petrol, diesel and
illuminating paraffin by 7.50 c/l, 8.84 c/l and 8.78 c/l respectively.
(2) The prices of crude oil
The average Brent Crude oil price increased from 60.00 USD to 64.00 USD
per barrel during the period under review. The Organisation of Petroleum
Exporting Countries (OPEC), other non-OPEC producers and Russia, agreed
to reduce oil supply to the global markets by 1.2 million barrels per day. This
reduction has led to an increase in the crude oil price. Other major factors that
contributed to the higher oil prices were, (a) the ongoing US sanctions against
Iran and the recently announced US sanctions on Venezuela and (b) supply
disruptions from Safaniyah offshore oil field in Saudi Arabia after a power cable
(3) Import prices of Petroleum Products
The international prices of all the petroleum products increased on average
during the period under review. This increased the contribution on the Basic
Fuel Prices of petrol, diesel and illuminating paraffin by more than 81.00 c/l,
100.00 c/l and 84.00 c/l respectively.
Radebe said as had been predicted last year, OPEC is determined to support higher crude oil prices by reducing production.
"They are achieving their objective due to the support by other non-OPEC producers. The actions of the oil producers and US sanctions have reversed the benefit that motorists had begun to enjoy following the decreases of approximately R3 in fuel prices during the months of December 2018 and January 2019," Radebe said.
Based on current local and international factors, the fuel prices for March 2019 will be adjusted as follows:
Petrol (93 Octane, ULP and LRP): 74.00 c/l increase;
Petrol (95 Octane, ULP and LRP): 74.00 c/l increase;
Diesel (0.05% sulphur): 91.00 c/l increase;
Diesel (0.005% sulphur): 93.00 c/l increase;
Illuminating Paraffin (wholesale): 76.00 c/l increase;
SMNRP for IP: 102.00 c/l increase;
Maximum LPGas Retail Price: 101.00 c/kg increase