Economist at Absa, Miyelani Maluleke, has warned that the fuel price may remain high this year despite the price drops taking effect from midnight on Tuesday.
Mineral Resources last week announced that the price of petrol would decrease by nine cents a litre.
The price of diesel will decrease by as much as 31 cents per litre and illuminating paraffin will be lower by 23 cents per litre.
The department says the price drops are on the back of lower oil prices and a stronger rand.
Maluleke says, “It’s important to kind of highlight that it does not sort of fully offset the fuel price hikes that we’ve seen since the start of the year. If you look at where we would be even after these adjustments, fuel prices could be quite a lot higher and going forward we’ll have to keep a close eye on what happens with international oil prices and the exchange rate. But it does look like over the course of this year, South African households will, in general, be paying quite a bit more for a litre of oil compared to what we saw last year.”
Record increases seen in April
Just last month, fuel price increases in the country were at a record high as motorists paid R1 more for a litre of 95 Octane fuel and 93 Octane is up by 95 cents per litre, pushing the petrol price to a record high of about R17 per litre.
Diesel went up by between 63 and 65 cents per litre, while the price of illuminating paraffin increased by 34 cents, pushing it up to R8.80 cents.
Mineral Resources sought to justify the fuel hikes, saying international crude oil prices, refined petroleum products, rand dollar exchange, as well as local factors, are some of the contributing factors in determining fuel prices.
The department said South Africa depends heavily on imported crude oil as it doesn’t have crude oil reserves for about 80% of the fuel demand.
The 27 cents for the fuel levies also came into effect.
Automobile Association spokesperson Layton Beard raised concerns that the levies are putting more strain on cash-strapped South Africans.
Discussion on the impact of fuel price hikes: