A rise in oil prices and recent depreciation in the rand could cause the price of petrol to increase by more than 30c a litre and diesel more than 20c/l early next month.

A rise in oil prices and recent depreciation in the rand could cause the price of petrol to increase by more than 30c a litre and diesel more than 20c/l early next month.


According to a report, the department of minerals and energy estimates petrol will cost about eight per cent more from February 4 and more bad news is likely in March, unless the trends affecting the two main variables (which largely determine liquid fuel prices in South Africa) do an about turn.


Although the rand regained some ground yesterday, the currency dipped to a four-month worst level against the dollar last week. At the same time, oil prices have been rising on the back of a supply squeeze in the US.


The most recent fuel price data released by the minerals and energy department, covering the period between January 26 and Monday this week, reveal an average daily under- recovery of notional import costs of 29c/l for petrol and 18,8c/l for diesel.


With just four days remaining in the January calculation period, which determines the price changes to be implemented on the first Wednesday of next month, there will not be any significant reduction in the average under- recoveries, even if the underlying trends are reversed in the near future.


South African Petroleum Industry Association (Sapia) director Colin McClelland said that with the daily underrecovery at 46c/l for petrol and 40c/l for diesel on Monday, the likelihood was that there would be a further price hike in March. However, looking ahead further than that entered the "realm of speculation", McClelland said, since both the rand exchange rate and dollar oil prices were notoriously volatile.

Original article from Car