Fuel hikes due to oil price rise and weak rand

Recent reductions in the fuel price have been dealt a blow by a steady increase in international petroleum prices in the first half of February, according to the Automobile Association (AA) on unaudited mid-month fuel price data released by the Central Energy Fund.

“Oil traded within a very tight band for most of January, but we have seen a steady uptick since February began,” AA spokesperson Layton Beard said. “This trend has accelerated in the last week in particular.”

At the same time, the rand, while currently offsetting some of oil’s gains, has been on a weakening trend against the US dollar since the start of February.

“The rand has slipped from R13.20 against the dollar on February 1 to R14.12 on February 14. This is not good news for fuel users at a time when the oil price is also rising,” Beard said.

The current data suggested a price increase of 43c/l was in the offing for petrol, 62c for diesel and 47c for illuminating paraffin.

“If the trendlines for oil and the rand don’t flatten out, there could be worse to come before month end,” said Beard.

“We advise motorists to factor some fuel price pain into their budgets moving towards March.”

PwC’s predictions for the 2019 budget review noted the general fuel levy had been increased significantly in each of the four previous budgets as a means of raising additional tax revenues.

The general fuel levy was previously seen as being less politically sensitive than VAT.

“This perception has, however, changed with the increased attention resulting from the VAT increase in 2018. So it might no longer be seen as a viable option to raise additional revenues for government. Increases are therefore likely to be limited to inflation. Therefore we expect the general fuel levy to be increased by between 15c/l and 20c/l,” the statement read.

“In the 2018 Medium Term Budget Policy Statement, it was stated that the liability of the Road Accident Fund (RAF) is expected to grow to R393 billion by 2021/2022, from R206 billion at the time of the MTBPS, and that the RAF would require further large increases to the fuel levy in each of the following three years.

“We anticipate an increase of at least 30c/l in the RAF levy, in line with the increase in the 2018 budget.”

There could be worse to come before month end.

Layton Beard AA spokesperson