How has the price of South Africa’s fuel risen over the last decade? We also take a look at the most expensive and cheapest countries.
Fuel Price Increase! The announcement comes every couple of months, and South Africans dread it more and more. We, as a country, are incredibly sensitive to movements in the fuel price. The average South African’s annual fuel expenditure is among the highest in the world. Any person who works on the road will tell you, the cost of keeping your tank full is unbelievable. We feel the pain at every pump.For example, only in Mexico do people spend more of their salaries on fuel.The 4th of October saw the ULP 93 and 95 prices increase by 25c and 29c per litre, respectively. The price of diesel went up by 42c per litre, and paraffin by 39c.The first half of September saw the rand appreciate against the US dollar. This reversed around midway through the month, however, leaving the rand cutting into its earlier gains. Currently, the rand is even weaker, and the AA (Automobile Association) expects this to have an even bigger impact on fuel users in the medium term.Stronger international oil prices and a weakening rand contributed toward the rising fuel prices this week. The AA has said that further hikes before the end of the year are almost inevitable.This is not only in SA, but internationally, fuel prices continued to gradually climb throughout September.So, the struggle, as they say, is real. But, at least it’s not Hong Kong real, whose residents are currently shelling out R27.06 per litre.
Over the past decade, the prices of petrol and diesel in SA have seen some serious fluctuations. ULP 95 has seen the biggest increase, while the retail price of diesel has mostly been cheaper than petrol. Though, this hasn’t always been the case, and is not a trend seen around the world.One of the key differences in the pricing of diesel versus petrol is that diesel prices reflect wholesale prices, not the price you would pay at the pumps. The retail price of diesel may vary from station to station, depending on the margins applied by each retailer.The graph and table below show how the prices have changed year-on-year, between August 2007 and now.2008 saw the world facing a global recession. This negatively impacted most product prices. Products, particularly food products and mining operations, are transported across great distances in the country. Fuel hikes then force producers and retailers to push the added costs onto us, the consumers.Over the next couple of years the whole world, including South Africa, attempted to recover from this recession.But, in 2011, the petrol price increased again, and continued to climb.
What Affects The Fuel Price?
Our fuel price is affected by two major components: the global oil price, and the currency exchange rate between the rand and the US dollar.The basic fuel price (BFP), in general, is determined by a number of factors, both locally and internationally.International influences include:
The transport of oil from international export stations to South African harbours;
15% insurance cover of total value of freight carried;
Tariff by National Ports Authority of SA to make use of local harbour facilities;
Coastal storage of fuel up to a maximum of 25 days.
While domestic influences include:
Transport of oil to inland depots from coastal refineries;
Fuel tax, or ‘Zuma Fun Money’;
Levy to the SA Custom Unions;
Road Accident Fund levy on both petrol and diesel.
In the table above, you’ll notice that between 2014 and 2016, fuel prices showed a year-on-year decline. This was as a result of much lower global oil prices. South Africa, of course, couldn’t capitalize on this too much; because we were too busy trying to stop uncertain investors from fleeing our shores.However, the benefits we could enjoy from lower oil prices are undone by the weakness of the rand. Our suffering currency, which is no better than Monopoly money at this point, is a direct result of a suffering country. Between our struggling economy, poor growth policies and political scandals, the fuel price is taking a battering.
The Best and Worst
South Africans may take some consolidation in the fact that other countries are paying far more. According to Global Petrol Prices, the average price of gasoline around the world is R14.75 per litre.As a general rule, richer countries have higher prices while poorer countries and the countries that produce and export oil have significantly lower prices.One notable exception to this is the US, which is an economically advanced country but has low prices, currently at R10.21 per litres. All countries, however, have access to the same petroleum prices of international markets, but then decide to impose different taxes. As a result, the retail price of petrol is different.The five most expensive countries in the world right now, when it comes to petrol, are:
Norway (R27.14 per litre)
Hong Kong (R27.06 per litre)
Iceland (R25.75 per litre)
Monaco (R24.95 per litre)
Netherlands (R24.91 per litre)
In comparison, the five cheapest countries right now are:
Venezuela (R0.12 per litre)
Suadi Arabia (R3.28 per litre)
Turkmenistan (R3.90 per litre)
Algeria (R4.30 per litre)
Kuwait (R4.74 per litre)
Must be nice. The last time South Africa paid Venezuela prices for petrol was back in 1973.