Durban - The increase in the fuel price, announced by the Department of Mineral Resources and Energy (DMRE), will hit consumers hard and put more pressure on the struggling economy, the AA says.
AA spokesperson Layton Beard said the adjustments, announced by the DMRE today, included an increase of R2.57 for 95 ULP petrol in Gauteng, which would push the cost to R26.74. The R2.37 increase for 93 ULP would push the fuel price to R26.31, all new record-high prices.
“The price of diesel will increase by R2.30, and the wholesale price of illuminating paraffin will increase by R1.66. In both cases, these increases will also push the prices of these fuels to new record highs.”
Beard said that according to the data, the movement in international petroleum prices was the main driver behind the increases.
“The value of the rand appreciated, on average, against the US dollar in June, resulting in a saving of around 20c/litre to the increases, without which the basic increases would be higher.”
Beard said a major factor in the increase of international petroleum prices remained the conflict in the Ukraine which was contributing to supply and demand pressures.
“As long as this conflict is unresolved, the increases to fuel prices – both in South Africa and other countries – remain likely.”
In addition, the R1.50 relief off the General Fuel Levy, granted by the government for May and June, was halved for July which added to the increases.
Beard said that while pressure was mounting on the government to formulate a solution to the rising fuel costs, short-term relief, while welcome, was unsustainable.
“We understand that the government has little leeway in terms of international petroleum prices and the rand/US dollar exchange rate, which is why we have called, and will continue to press, for a review of the fuel price, an area where the government has control over the fuel price.”
Beard added that a fuel price review needed to be initiated with urgency.
“There is a need to interrogate all the components of the fuel price, to determine whether all the components are still necessary in the existing formula, and to establish if the current calculations of these components are correct. The longer this review is not initiated, the longer the country will wait for lasting solutions.”