6 Things you need to know about the rising petrol prices

Things are looking bleak for South Africans after another petrol hike this week. The price of petrol has affected food prices and transport amongst many other necessities. People have called for the South African government to intervene and there’s been a lot of talk of national protests around this issue. Six major developments have happened so far around petrol in South Africa:

1. There could be another petrol hike in August

On Wednesday 4 July, South Africa experienced another petrol hike where 95 octane reached R16. This is due to the weakening Rand against the dollar (from R12.51 to R13.29 for 1 USD) amongst other factors. In August this price is predicted to increase by another 25 cents if the rand continues to drop. This would be the fifth consecutive price hike since April.

 

2. Government pockets a third of the petrol price

Bloomberg reports that between the Rand dropping and the tax pushing the petrol prices up, government pockets more than a third of this, which makes it profitable for them to have rising petrol prices. According to Bloomberg, of the 16.02 Rand ($1.16) motorists will pay for a litre for the 95-octane gasoline in the province of Gauteng, taxes, fuel levy and the Road Accident Fund levies account for R5.44. This means without these levies and taxes, petrol could cost R10.58.

3. The Road Accident Fund is reportedly bankrupt

There are reports that the Road Accident Fund, one of the beneficiaries of the petrol tax levy, is bankrupt. The Sunday Times reported that despite this development, it has not stopped the RAF from renting 300 office chairs at a price of R1,666 per month per chair or R500,000 per month in total. The report says that the fund was planning to take out a R60 million rental contract over a five-year period.

 

4. SA’s fuel tax has risen far more than the rest

Bloomberg also reports that South African fuel taxes have risen higher than consumer prices. South Africa imports oil which means the fuel price is heavily influenced by international crude oil prices and the Rand’s performance against the Dollar. While crude oil increased by 11% in June and the Rand steadily dropped against the dollar, the rate of growth in fuel taxes and levies has outpaced inflation for the past six years.

 

5. Cyril Ramaphosa has called for the management of petrol price increases

President Cyril Ramaphosa addressed journalists at the Union Buildings this week and said the recent fuel increases were unfortunate, but that the government was working towards finding a solution. “We, as a government, are busy at the moment looking at the impact of these price increases with regards to petrol and we are actively looking at ways in which we can find some solutions,” he said. ANC released a statement regarding the increasing petrol prices after mounting pressure from the public.

 

6. Petrol is at its highest in over a decade

South Africans are paying more for fuel than ever before in the history of the country. In January 2008, 95 octane petrol in Gauteng was R7.47 and jumped R10.70 in July but dropped to R6.01 by January 2009.  In January this year petrol was R14.42 and has jumped to R16.02 in July. The price movement in 2008 and 2009 does not correlate with the current price movement.

 

 

 

  AUTHOR
Caxton Central

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