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Possible drop in fuel price will be pretty meaningless

2017-03-15 13:28

DROP IN PRICE: With the price of fuel set to decrease, motorists can look forward to making at least one less stop at the pumps. Image: iStock

Automobile Association

Cape Town - Although fuel prices are predicted to drop in April, most of the benefit of the decreases will be wiped out by the increases to the general fuel, and Road Accident Fund (RAF) levies.

This is according to the Automobile Association (AA), which was commenting on unaudited mid-month fuel price data released by the Central Energy Fund (CEF).

51c decrease

The general fuel levy will increase by 30 cents, and the RAF levy by 9c, on April 1. Based on the current data, the AA is predicting that petrol will decrease by 51c/litre, diesel by about 27c/ litre, and illuminating paraffin by 32c.

The AA said: “This means that while motorists may have expected the current price per litre of petrol to drop substantially, they will now only see it going down by around 12c/litre.

#Budget2017: SA fuel levy hike - here's how it will affect you

"Diesel users, on the other hand, will see an increase of 12c/litre, with the levies eating up any gains."

The Association noted international petroleum prices have continued to decline leading to the expected drops at the end of the month.

Flat exchange rate

The AA noted: "OPEC's reduction in its crude oil output targets has been countered by increasing global oil stocks held by non-OPEC nations. This has gradually pushed the oil price down to near the levels it was maintaining before OPEC's output targets were adjusted, which is good news for South Africans."

The Association said that the Rand/US dollar exchange rate had remained nearly flat since the end of the month, meaning South Africans were likely to see the most of the benefit of the oil price drops.

#Budget2017: Fuel levy hikes - here's how to stretch your budget

The AA concluded: "The Rand has shed around four cents against the dollar since the start of March. If this period of relative stability in the exchange rate continues, the currency will only have a small influence on the fuel price at month end."

Watch below how South Africans will probably "feel" when the price of fuel drops in April:


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