As we are approaching the festive season a small silver lining presents itself where our fuel prices are concerned. Recent research shows that South Africans are in actual fact paying about 9% less now for fuel than what they did a year ago.
This is largely due to the decreasing impact of the COVID-19 pandemic on the oil demand, which in turn has led to a record-breaking fuel reduction of R2/l in April this year.
An inland 95 fuel priced reached a low of R12.22 in May, however as we saw the oil market recover, we also saw a gradual increase in prices to R15.18 in September.
As of midnight, on 3 Nov petrol has been on sale for R14./l, almost R1.50/l lower than in 2019. Unleaded 93 sold for R15.66/l last year and is now standing on R14.39 – more than an 8% drop.
Our biggest price decreases this year is with diesel. For 50ppm grade it is down by plus minus 17%.
As we import most of our oil, priced in dollar, our fuel prices are determined by the rand and oil prices.
The reduced fuel price which we saw this week is due to the oil price hitting a five-month low, as the market found itself being vulnerable yet again due to Belgium, Germany, France and England’s hard lockdown being reinstated.
Depending on the stability of the rand, we could see at least on more fuel reduction. It is almost certain. Forecast models are predicting a plus minus 60c/l drop.
Bastion Advisory’s head of commodities say that even though what we saw in April is improbable, oil prices will not drop below the $20 mark again.
He added that due to the worldwide crash we saw in April, global markets have learnt from that and have adjusted to better regulate supply.
In the same breath talks of secondary lockdowns are not anticipated to be as drastic as before and freight and trade are unlikely to cease.
Even though pressure at the pumps have lessened, motorists have been warned of a looming fuel levy increase. Currently the general fuel levy accounts for R3.77/l of petrol purchased, while a further R2.07 is siphoned by the RAF.
Finance Minister Mboweni is expected to raise both the RAF tax as well as the fuel levy to recover some losses inflicted on government’s coffers during the lockdown period.
These details will be released during the 2021 Budget Speech delivered in Parliament in February and the changes will be applied in April 2021.
Until then we get to enjoy lower fuel prices as we look ahead to a brand-new year with new possibilities.