Fuel hiked again on ominous oil

Ominous oil price data is the main cause of increased fuel prices.  This is according to the Automobile Association (AA), which was commenting on the latest price hikes for February announced by the Minister of Mineral Resources and Energy (DMRE).

Petrol will rise by 53 cents a litre, diesel is up by 80 cents a litre, and illuminating paraffin by a whopping R1.01 cents a litre. The February increases will push fuel prices in South Africa close to the record highs experienced in December 2021. Going into February, 95 octane petrol inland will cost R20.14/l with the same fuel costing R19.42/l at the coast; both fuels will cost just 15 cents less than they did in December.

"The large increase in illuminating paraffin in particular will hit poor people hard, as many of them rely on this fuel for lighting, heating and cooking," the AA says.

The major factor in the latest hike is the rapid strengthening of benchmark crude oil prices to nearly USD90 a barrel.

"The last time Brent Crude touched current levels was in October 2014, more than seven years ago. A combination of factors is pushing oil higher, not least the imbalance between supply and demand as the lower-than-expected economic impact of the Omicron COVID-19 variant pushes economic activity higher, and crude production lags. In addition, there are political jitters around the Ukraine, which could see a switch to increased oil use throughout the EU if Russia restricts natural gas output in response to sanctions threatened by the USA and United Kingdom."

The AA says the strength of the Rand relieved the burden of the increases somewhat noting that without the Rand's recent strength against the US dollar, the price hikes would have been around 25 cents higher than they are.

“While the decrease in fuel prices for January was naturally welcomed, we remain convinced that a review of the fuel price in South Africa is necessary. The increases for February are significant and push our country’s fuel prices near record territory again and will, undoubtedly, have a knock-on impact on other consumer products and services,” the Association notes.

The AA says its petition to #ReviewTheFuel is gaining momentum and that close on 25 000 people have already signed the petition urging government to initiate a review of all the components of the fuel price as well as conduct an audit of all existing elements to determine if they are still applicable and correct.

“Our call is for the Minister of Finance to announce such a review in his Budget Speech in Parliament on 23 February as a first step towards mitigating against rising fuel costs effectively for the benefit of all South Africans,” the AA concludes.

To support the AA’s petition to review the fuel price, visit https://aa.co.za/review-the-fuel/.