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Skyrocketing fuel prices will hurt everyone in the country, whether they make use of a vehicle or not, said the Automobile Association’s Layton Beard on Wednesday, leading to negative effects on the economy.

Motorists are now paying R21.60 per litre of petrol, up from R20.14 last month.

As of Wednesday, South Africans will pay R1.46 per litre more per litre of petrol, R1.44 more per litre of 0.05% diesel, R1.48 more per litre of 0.005% diesel and R1.21 more per litre of illuminating paraffin.

Beard explained:

It’s an input cost in the agricultural sector, the transport sector and the manufacturing sector, and it will affect all these industries because prices will undoubtedly increase. It is definitely bad news for everybody across the board.

“We have had significant increases in the past. In July of 2020, for instance, we had increases that went above R1.70 per litre,” he said.

At the time, the cost of 95-octane petrol increased by R1.72 a litre, 93-octane petrol by R1.63 per litre, diesel 0.05% by R1.73 per litre and diesel 0.005% by R1.69 per litre.

Beard said:

The difference is that, as a result of ongoing price hikes over a period of time, we are at a stage now where this increase takes the cost of fuel to record highs.

Asked about the possibility of another increase in the near future, he admitted that it was too soon to say.

“We will have to wait and see what happens in the next couple of weeks and how the Russia-Ukraine conflict is going to work itself out in terms of the oil prices. The Russia-Ukraine conflict has pushed the price of international oil higher, resulting in the fuel increases”.

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Isaah Mhlanga, chief economist at Alexander Forbes, agreed with Beard and told City Press that Russia’s invasion of Ukraine was one of the main reasons the price of fuel was increased by so much.

According to Mhlanga, while the 15c increase in the slate levy contributed to the price increase, “the oil price was the biggest driver”.

Last week, the global oil price rose to more than $100 (R1 530) per barrel after Russia – a country that is a key supplier of crude oil – declared war on Ukraine.

Mhlanga said:

The Russia-Ukraine conflict has already affected oil prices as they have increased to over $100 per barrel. If it remains there, it will see the effects filtering through to fuel prices even more. We are currently also seeing currencies from emerging markets weakened, meaning we might see a combination of a higher oil price with a weaker currency, and that means we are likely to see higher fuel prices than those we are seeing today.

Focusing on South Africa, the economist said the negative consequences of the fuel price increases left other countries better off compared with South Africa.

How petrol prices have changed over the last five years:

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“If we just take 95 unleaded petrol for instance, and let us assume there is 55-litre tank for a car, that means it now costs about R80 more to re-fuel that car. If we consider a re-fuelling of four times a month for that car tank, that will cost about R320 more per month – if fuel prices are to remain at the current prices as of Wednesday.”

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“And if you consider that there are about 12 million cars on South African roads, that means there’s about R3.8 billion that is going to be used on fuel. That is the amount of money that is no longer available to spend on other things that consumers would want. Because we import oil, it means all that money leaves South Africa to create jobs in other countries, rather than in South Africa, and that is a negative consequence of high fuel prices, which will drag economic growth.”

Between December 2016 and December last year, the price of petrol increased by R9.16 a litre.

SOURCE:

R3.8bn to be spent by SA motorists amid fuel price hike | Citypress (news24.com)