South Africans are warned to brace for another big increase in the price of fuel as we enter the third month of 2022.
In South Africa, several different factors make up the price consumers pay for fuel in the country. These factors include the price per barrel of Crude Oil, the Rand to US Dollar exchange rate and levies from the government.
On Tuesday, the price of Brent Crude oil rose to $98 per barrel, the highest it has been since September 2014.
The Department of Mineral Resources and Energy explained thatA crude-oil refinery's biggest input cost is crude oil.
For a refinery to make a profit, the price for the product manufactured from crude oil has to be higher than that of the crude oil price.
When crude oil prices increase, the petrol price has to increase so that crude oil refineries can cover their costs”.
The Automobile Association (AA) says a hike in the price of fuel will be greater than R1/l. The AA was commenting on fuel price data released today by the Central Energy Fund (CEF)
The AA said, “The data is showing an increase of R1.25 a litre for 95 octane petrol, R1.24 a litre for 93 octane, R1.29/l for diesel and a significant increase of R1.22/l for illuminating paraffin,”.
These increases could mean that petrol will breach the R21 mark in inland provinces like Gauteng. This would simultaneously mean that the price of fuel has increased 31% over 12 months.
Efficient Group chief economist Dawie Roodt concedes that the increases are not a surprise.
He said, “Naturally we are concerned about these expected increases which will undoubtedly put more pressure on already stretched consumers. These hefty increases also reaffirm our belief that a review of the fuel price is necessary to establish if there are any components within the current pricing model that can be revised to mitigate against rising costs”.