Fuel price drop welcomed

FOLLOWING a tough financial year for many South Africans in 2021, some relief arrived this week in the form of a fuel price decrease.

However, experts said more financial reprieve was needed for consumers.

Furthermore, high fuel prices needed to be investigated, they said.

Minister of Mineral Resources and Energy Gwede Mantashe announced the adjustment of fuel prices on Monday.

The new prices of all fuel come into effect on January 5.

Both 93 ULP (unleaded petrol) and 95 ULP petrol decreased between 71 cents and 68 cents per litre, respectively. The price of diesel dropped by between 67.8 and 69.8 cents a litre. Illuminating paraffin decreased by 71 cents.

Current estimations

Previously, 95 ULP cost R20.29 inland and R19.57 at the coast. With the latest decrease prices are R19.61 inland and R18.89 at the coast.

Diesel, which previously cost 17.31 a litre at the coast, now costs R16.63 a litre. It used to cost R17.92 a litre inland, now it is R17.24 a litre.

South Africa’s fuel prices are adjusted on a monthly basis, based on international and local factors.

“International factors include the fact that South Africa imports both crude oil and finished products at a price set at the international level, including importation costs,” said Mantashe.

Layton Beard, Automobile Association (AA) spokesperson, said the rand’s performance had contributed to the drop in price.

“The rand has strengthened against the US dollar, pulling away from the lows of mid-December when worries mounted over the economic impact of travel bans imposed as the Omicron variant of Covid-19 swept the world.

“The rand has since clawed its way back to around the R15.88 mark, some 40 cents stronger than its mid-December low,” said Beard.

But the current high fuel prices must still be a driving force for a review of the fuel price structure, as well as an audit of the existing prices within that structure, he said. “We were pleased that our calls in this regard have reached the ears of the Minister of Finance. We welcome his pre-Christmas comments that the fuel price structure needs a critical re-look, and we call on him to make quick work of this issue ahead of his 2022 Budget speech in February.

“Apart from not increasing the existing levies on fuel at all during that speech, we would also like to see an announcement on concrete plans to review the fuel price before the end of the second quarter,” said Beard.

Food prices

Mervyn Abrahams, a programme co-ordinator at the Pietermaritzburg Economic Justice and Dignity Group (PMBEJD), said while they welcomed any decrease in fuel prices, it would not have a major impact on food prices.

“Any drop in fuel prices is good for the consumer. However, for it to have an impact, for example, on a decrease in food prices, we have to see fuel prices coming down and stabilising for an extended period of time. If this does not happen, it will not have any impact.

“It is important to note that many households’ incomes are not able to keep up with the trend of increasing costs of fuel, food, or electricity. More households are in fact becoming poorer,” he said.

Abrahams echoed the AA’s sentiment in calling for an investigation into why fuel prices were so high.