Commenting on unaudited data released by the Central Energy Fund on Tuesday (May 15th), the Automobile Association (AA) said the worsening of the Rand against the US Dollar and stronger international oil prices, are only part of the reasons for the second substantial price spike in as many months.
“Last month's fuel price account was closed earlier by the Department of Energy, resulting in the postponement of a substantial 50 cent per litre increase brought on by a weakening Rand and rising international oil prices at the end of April. However, this means the country started the month (May) with a substantial fuel price deficit,” the AA said referring to an initial report that predicted a 92 cents a litre upswing for May.
Based on the provided data, the AA said it expects the price of petrol to go up by 74 cents a litre, diesel by 81 cent and illuminated by 78 cents.
“We are concerned about the impact of these price hikes on the economy. Rises in the fuel price increase the cost of doing business, and companies have few options but to pass these costs on to consumers. Worryingly, people who use illuminating paraffin for lighting, heating and cooking will suffer a further blow as the country heads into winter,” AA continued.
By mid-day on Tuesday, the Rand was trading at R12.52 to the US Dollar with Brent Crude Oil at $78.47 a barrel.