South Africa News

AA: Fuel price hikes disastrous for consumers

The fuel price hikes announced by the Energy Department on Monday night would be disastrous for fuel users and consumers across the board, said the Automobile Association (AA).

The AA on Tuesday said a perfect storm of demand imbalances, refinery costs, natural gas price hikes, and rand weakness would see the petrol price close in on R20 a litre in the run-up to Christmas.

Diesel will go up by R1.48 a litre, illuminating paraffin is set to jump by R1.45 a litre, and petrol will rise by R1.21 a litre for an inland price at the pumps of R19.54 for a litre of ULP95. The price of ULP95 in Polokwane is already testing the R20/l mark, with fuel there now costing R19.97/l.

The association said that it would continue to push for answers on how the levies incorporated into the fuel price were being allocated and managed.

“The fuel price has a direct bearing on an already weak economy as it continues to drive up inflation on essential consumer goods and affects every South African. As we have said many times in the past, all the elements that comprise the fuel must be fully interrogated to determine if they are necessary. Given that the fuel prices are now at record highs, such a review is overdue, ” the AA said.


The AA also said that it was deeply concerned by the delayed release of the Department of Mineral Resources and Energy’s (DMRE) announcement of the price hikes, which was headlined “FOR RELEASE ON 28 OCTOBER 2021” but which was only issued by the DMRE 15 minutes prior to the polls closing on election day.

“When a media statement is datelined four days prior to an election but delayed until 15 minutes before the polls close, it is difficult to conclude otherwise than that this bad news was deliberately suppressed to protect the incumbent government,” the association noted, adding that they would be writing to Parliament to demand an explanation for the delay.

Commenting on the month in review, the AA said that international petroleum prices surged on the back of an ongoing mismatch between demand and supply as the world’s economies attempted to come to grips with the COVID-19 pandemic.

“More pain is being added by refining margins reaching their highest levels since 2017. And these are just the external factors over which South Africa has no control. Another contributor to the price hikes has been the ongoing slide in the Rand, which added around 15 cents to the increase,” the AA added.

The association said the forward-looking prognosis is grim.

“With oil demand buoyant and supply lagging, the ongoing issues with natural gas cost and supply, and refining costs a worry, we see little cause for optimism. Added to this is the volatile Rand/US dollar exchange rate and users of liquid fuels in South Africa are probably in for a rough ride in the next three to six months,” the AA concluded.


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