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Bad news! Fuel price hike in January likely says AA

2016-12-14 13:56

TOUGH CONDITIONS FOR MOTORISTS: The Automobile Association is forecasting a fuel price hike in January 2017. Image: iStock

Cape Town - Surging international petroleum prices are likely to hit South Africans hard at the pumps at the beginning of 2017. This is the view of the Automobile Association (AA) which was commenting on unaudited mid-month fuel price data released by the Central Energy Fund (CEF). 

The AA said: "Saudi Arabia has indicated that its crude oil production cuts may go beyond those proposed in November, there are also signals that non-OPEC members may voluntarily decrease production, which has the potential to further bolster international petroleum prices."

The first fortnight of December showed a strong appreciation in oil prices, while the Rand remained volatile against the US dollar. Based on the current data, the indicative increase in fuel prices at the end of December will be around 27c a litre for petrol, 21c for diesel and 28c for illuminating paraffin.

Possible hikes in the next few months

The AA warned that the impact of production cuts was by no means factored into current oil prices. 

The Association said: "If the oil-producing countries adhere to the proposed production cuts, oil prices are likely to strengthen until demand and production move back into equilibrium.  

"Even a stronger Rand could be overpowered by a sharp climb in the oil price, potentially meaning a succession of fuel price hikes which could impact the economy strongly over the next few months."

6 tips on how to save fuel

The AA advised private motorists to review their energy use and commuting patterns, and consider alternatives to single-occupant vehicle use, such as car-pooling. The motoring body added that a rising fuel price was also an incentive for corporate delivery fleets to re-assess vehicle selection and routing schedules to maximise fuel-efficiency. 

"Mitigation will be the key strategy against prolonged fuel price rises," the Association concluded.


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