The latest data from the Central Energy Fund (CEF) points to a flat month in August for petrol prices – though there may be good news for diesel drivers. The retail price of petrol will increase by 11 cents per litre from August. The Central Energy Fund said the economic factors which contributed to the price adjustments included the rand/dollar exchange rate for the period from 28 June 2019 to 01 August 2019, which was 14.0709 compared to 14.6227 during the previous period. The wholesale price for illuminating paraffin will however decrease by 2 cents.
For the first two weeks in July, the rand has strengthened against the dollar, contributing to a 25-27 cents per litre drop in both the petrol and diesel prices. The rand has experienced new strength in the last week or so, due to an improvement in local sentiment on the back of government plans to bail out Eskom, as well as international movements which have renewed investor appetite for riskier assets.
Locally, National Treasury announced a new ‘rescue plan’ for embattled power utility Eskom, which would see it access funds set aside for its restructuring and turnaround plan a lot sooner. This put investors at ease that the power utility wouldn’t be left in the lurch by the government, and that it would have the necessary support to improve its financial situation. Other positives feeding local sentiment was the reappointment of Reserve Bank governor Lesetja Kganyago for another five-year term, which reinforced government’s stance on continuity at the central bank, staving off talk of nationalization and mandate change.
After weeks of declining prices, international oil costs are rising again. Prices have been dropping due to a general global economic slowdown putting pressure on demand – exacerbated by volatile US-Iran relations, and an extended production cut in OPEC regions. However, a combination of geopolitical tension in the Persian Gulf, outages in Venezuela and Iran, the aforementioned rate cut by the US Fed and the brewing storm in the Gulf of Mexico has led to strong price increases in oil over the last week.
The AA offers a history of fuel prices on its website to help South Africans stay abreast of their financial expenses. This tracks a variety of fuel types and separates coastal and inland prices for consumer convenience. The data shows that fuel prices have increased by more than double since 2009, with unleaded petrol showing the largest price increase over the course of this period.
South African car owners have faced significant fuel price increases for many years, and it has become a common frustration for local drivers. The increases have been so significant that the government previously discussed the possibility of setting a cap on how high these prices can go.
By Noni Nchwe