Johannesburg - If there is one silver lining in the current Covid-19 crisis, it’s that international oil prices have plummeted, and despite the rand’s losses, this is set to result in massive savings at the pumps from April. Of course, those who are able to will already be saving money through self-isolation.
Earlier in the month it looked as though April’s fuel prices would drop by around R1 a litre, even with the government’s 25 cent tax hike that comes into effect next month, however oil prices have continued to drop and as a result the savings per litre are likely to be closer to the R2 mark, as implied by the latest Central Energy Fund data.
At the time of writing there were just six days remaining in the fuel price calculation cycle for April, and the latest data was pointing towards decreases of R1.74 a litre for petrol and R1.47 a litre for diesel, which would be reduced to R1.49 and R1.22 respectively after the new tax calculation.
However, those average 'over-recovery'* figures that will determine next month's fuel price are growing by around 10 cents day in the case of petrol and 7 cents for diesel, as the daily over-recovery numbers have been hovering around R3 a litre for the whole of this week. Even with a conservative increase estimate of 6 cents a day going forward, we could still be looking at a petrol price decrease of R2.06 a litre, which would become R1.81 after the new tax deduction. The diesel over-recovery is growing at a slower rate, but could still end up close to the R1.50 mark after tax.
Sadly record-low oil prices do not translate into record-low pump prices thanks to taxation, as the fuel and Road Accident Fund levies currently account for almost 40 percent of the fuel price, says the Automobile Association.
Although it's too early to predict May's fuel prices with any degree of accuracy, if current oil price and currency trends continue through April then it's likely that motorists would enjoy another significant price decrease in May, possibly of around R1 a litre.
Watch this space later next week for the official month-end fuel price calculations.
*An over-recovery means that the current oil price and rand interaction results in a figure that's lower than the current fuel price, and this ultimately translates into a decrease the following month. An under-recovery means the opposite, of course.