Some good news about fuel price

The AA predicts happiness at the pumps in December.

Massive fuel price reductions are expected next month, but these could be tempered by adjustments in the retail and wholesale margin and the possible continued use of the slate levy.

This is according to the Automobile Association (AA), which was commenting on unaudited month-end fuel price data released by the Central Energy Fund (CEF).

“The good news is a likely R1.85 reduction per litre in the price of petrol, with diesel coming down by an estimated R1.40 and illuminating paraffin dropping by R1.28. With these expected drops, the fuel prices will return to levels last seen around the middle of 2018,” said the AA.

“These massive decreases stem from a combination of substantial retreats in international petroleum prices and a slightly firmer rand, which has trended stronger against the US dollar since its most recent peak, in early September, at close to R15.50 to the greenback.”

However, the association said it was possible that not all of these decreases would make it through to the motorist.

“April, September and November saw adjustments to various levies which are included in the fuel price structure. The December adjustment relates, among other things, to wholesale and retail margins, which could lop off some of the decrease,” said the AA.

“There is also the issue of the slate levy, which may or may not be retained.”

The slate levy is used to claw back losses from fuel price under-recoveries when the cumulative petrol and diesel slate balances exceed R250 million.

At the end of September, the negative balance was R2.2 billion and this was apparently counteracted by the imposition of a slate levy of 21.92 cents during November.