Another blow for SA consumers as fuel prices rise again

JOHANNEBURG - Fuel went up sharply at midnight on Tuesday, though the effect on inflation is expected to be slightly downward, according to Econometrix economist Laura Campbell.

Petrol prices go up 29c a litre for 95 octane and 25c for 93c, the Department of Energy has announced. Diesel prices will rise 42c a litre for 0.05 percent and for 0.005 percent sulphur content.

Campbell said on Monday that SA should expect yet another fuel-price increase in November in the light of the combination of rand weakness and a substantially stronger oil price. She said the rand and oil-price trends were expected to persist in the near term.

The rand traded at about R13.59 to the dollar late on Monday and Brent crude was at $55 a barrel.

Brent had been ranging between $55 and $59 a barrel, or an increase of about 12 percent for September, as a result of geopolitical factors, including news of rising tension over Kurdish demands for independence from Iraq.

Campbell’s outlook for oil prices was corroborated by analysts at Ashburton Global Energy Fund, which said that after years of shrinking cash flows at Opec’s producers, the oil cartel’s efforts to clear inventory levels seemed to be succeeding.

Ashburton’s Richard Robinson was reported as saying that if US onshore projects coming online in 2018 and 2019 appeared lean and the market tightened, oil prices may jump to $70 by the second half of 2018.

“(This is likely) if we see a global balancing of inventories and consequently a return of a risk premium, something not encountered recently due to the comfort of large storage volumes,” Robinson said.

Despite the fuel price increases, which the Department of Energy blamed entirely on international factors, Campbell expected the fuel-price component of the consumer price index (CPI) to exert a slightly downward pressure on inflation.

– BUSINESS DAY.