Relief On The Way With Petrol Price Drop

The Automobile Association has predicted a drop in the petrol price for November. Unfortunately, it's bad news for diesel users.
Jason Snyman
2018-11-02

Last week, senior economist at the Bureau for Economic Research at Stellenbosch University, Hugo Pienaar, spoke to Business Insider South Africa about the prospect of looming relief for South African consumers.

At the time, Pienaar predicted that the price of fuel may drop by around 3c per litre (or at very least stay the same) come November, after months of successive hikes – and said that things are looking increasingly promising.
 

It is not only that the rand, on average, performed stronger against the US dollar, but the oil price also fell sharply from around $86 a barrel in early October, to around $76 today.

According to the AA (Automobile Association), however, we can expect an even bigger drop.

There’s a little bit of relief on the way for petrol-vehicle owners. The AA (Automobile Association), in commenting on unaudited month-end fuel price data released by the Central Energy Fund, expects the petrol price to drop by around 16 cents per litre.

Unfortunately, for diesel and illuminating paraffin users, it is expected that prices will rise for both of these by around 30 cents per litre.
 

The exchange rate started the month badly, but has since levelled out,” the AA said. “The rand’s modest gains against the US dollar have helped cushion the impact of rises in the landed price of fuel in the case of diesel and illuminating paraffin.

New Prices

South African motorists have been left reeling by fuel prices this year, weathering hike after hike, month after month. The price of 93 Octane rose from R14.20 at the beginning of the year to R16.85. 95 Octane climbed from R14.42 to a staggering R17.08. Diesel 50ppm rose from R12.77 to R15.69 while 500ppm rose from R12.74 to R15.64.

This was largely due to the price of global crude oil and the rand’s toothless showing against the US dollar, and as it currently stands, many economists are still cautioning motorists to prepare for a R17.90 price tag by the end of the year, and R20 by the end of 2019.

The new increase, set to come into effect on 7 November, will see Diesel pushed over the R16 p/l mark. Inland 95 Octane is set to drop to R16.92 per litre and 93 Octane will be reduced to R16.69.
 

Cause For Optimism?

The Association said that, should the rand maintain its current trajectory of (relative) stability, it could bode well for fuel prices come Festive Season.

The AA went on to add that international petroleum prices have shown modest declines over the month of October, and though it has declared this as cause for optimism, it has also cautioned against premature celebration.
 

2018 has been one of the most tumultuous years in history for South African fuel users, and the economy is still fragile and easily spooked.

Furthermore, there’s even been some talk of the government’s plans to put a cap on the fuel price, but we’ll have to wait until the end of November for further news on that.
 

The War On Fuel

This sliver of good news, however tiny, could not have come at a better time. South Africans fed up with the exorbitant price of fuel have begun to channel their fury, and new initiatives, such as SA Fuel War, have launched campaigns to protest the petrol hikes.

The aim of these campaigns is to reduce the amount of money our government is generating through the fuel levy.  

One such demonstration is asking commuters who travel to work in their own cars to work from home for ten days, starting on the 5th of November, while also asking employers to be lenient with their staff during that period.
 

We cannot simply park our cars on the freeway and walk home like they did in Germany to protest the fuel hikes there. We’d put most of the insurance companies out of business,” said SA Fuel War organiser, Craig Berman.

SA Fuel War’s multi-phased plan, then, is to recruit as many supporters as it can until the end of January 2019, and unless the government takes steps to drop the price of fuel before that date, Berman says that they will launch a war of attrition by throttling the supply of fuel revenue.

What this basically means is, stop paying for fuel hikes and stop giving the government your money. Instead, work from home.

According to September statistics from eNatis, there are over 7 million cars registered in South Africa, while the Department of Energy reports that by the end of June, almost 5.6 billion litres of diesel and over 6 billion litres of petrol had been sold in South Africa.

So, motorists who commute to work on a daily basis buy the most fuel and pay the most in fuel levies.

As per SA Fuel War, if a big enough proportion of SA motorists can reduce their amount of fuel consumed to one tank of petrol per month, this will result in an oversupply of fuel and a substantial deficit in fuel levy income.
 

What do you do with a surplus of 800 million litres of fuel? You have to drop the price.

The aim, according to SA Fuel War, is to force the government to drop the petrol price to R12 per litre.