How do SA’s petrol prices compare to the world’s and what this means for business?
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What’s up with SA’s latest fuel hikes? It is particularly concerning for fleet managers where fuel is a number one expense.
The latest petrol hike of R2.43 per litre in June 2022, has left us facing the highest petrol price South Africa has ever seen. As this concerns every citizen and business out there, we should understand our petrol price situation compared to other countries and within the context of our current economic position. So let’s take a trip around the world and compare fuel prices, and then touch on how fleet owners can ease the knock.
Petrol price history in South Africa
But first, let’s take a trip down memory lane so we can get the full picture.
On average, South Africa’s fuel prices have risen by more than 278% in the past 20 years.
Petrol 95 is the fuel type that experienced the biggest overall increase, of 368%, while Diesel 50ppm grew by 51% since 2008. Just to mention, Diesel 50ppm was only introduced into the country in 2006, with the earliest official price records we could find dating back to 2008.
2008 was the first year where the country experienced double-digit fuel prices, where Petrol 95 climbed to R10.70 and Diesel 50ppm to R11.35. As we know, fuel prices fluctuate and there was a period between 2008 and 2011 where petrol prices did drop below R10. However, 2011 was the last year of petrol prices being below R10.
Check out this graph which details South Africa’s average fuel prices, as provided by the Automobile Association (AA) and DOE websites, from January 2001 to September 2021. It must be noted that the petrol prices used in this graph were recorded as inland prices from 2006 onwards, whereas all diesel prices are based on historical coastal prices.
That being said, coastal fuel prices are generally lower. Fast forward to current times, from January to June 2022, inland fuel prices jumped from R19.36 to R23.94.
Why is petrol so expensive in South Africa?
The main reason for the price increases is the movement in the international price of crude oil. The acceleration is linked to the Russian war in Ukraine. It is expected that the crude oil price will remain at high levels for the duration of the war. However, there are other factors contributing to the overall fuel price. We will help you understand where all these figures come from.
How are petrol prices calculated?
According to the AA, South African fuel price calculations take into account the following 5 elements:
Slate Levy (SL)
The Slate account represents a self-adjusting mechanism that the government uses to deal with daily differences in petrol prices. They assess daily over-recoveries (consumers are paying too much) and under-recoveries (consumers are paying too little), and any differences go into the Slate account. It is applicable on fuel when the Slate account is in a negative balance (there have been more under-recoveries than over-recoveries in the review period).
General Fuel Levy (GFL)
This is a tax added to every litre of petrol that is sold. It is administered by the National Treasury.
Road Accident Fund Levy (RAF)
This refers to the South African state insurer. It provides personal injury insurance to all drivers (except those that have been labelled negligent) in the event of an accident.
Basic Fuel Price (BFP)
It’s the measurement of what it would cost a South African petrol importer to purchase petrol from an international seller, transport the petrol, insure it against loss, and then sell the product in South Africa.
Wholesale and retail margins, and distribution costs
Wholesale margins refer to the price of petrol charged by refineries to produce and export petrol and make a profit. Retail margins are the costs charged by oil companies to sell petrol at a retail price (when you fill up at a petrol station). In South Africa, retail margins are calculated by the Department of Energy.
Now that you know everything about the fuel price, let’s unpack a few more interesting insights. These taxes and levies are adjusted regularly, with 2021 facing an increase in two of the largest levies on fuel – the GFL and RAF. The cost of petrol can further be influenced by the price of crude oil, international politics, and the exchange rate between the Rand (ZAR) and Dollar (USD).
It is predicted by several economists that the prices of both petrol and diesel may worsen soon, given the exchange rate between the Rand and the US Dollar and worldwide developments.
Are fuel prices the same around the world?
According to GlobalPetrolPrices.com, there is a significant difference in petrol prices among countries. Although all countries have access to the same petroleum prices in international markets, they can decide to impose different taxes, resulting in a difference in the retail price of gasoline. As a rule of thumb, richer countries generally have higher prices while poorer countries and the countries that produce and export oil have significantly lower prices. One notable exception is the U.S. which is an economically advanced country but has low gas prices.
How SA's petrol price compares to the rest of the world
According to data tracked by GlobalPetrolPrices.com, as of 13 June 2022, the average price of gasoline around the world is 1.44 U.S dollars per litre (R23.04). The current petrol price per litre in South Africa is sitting at R23.29 a litre, making us within the average on a global scale.
However, it is considerably high as each country has a different economic situation making petrol prices relative. For example, other countries might compensate citizens in other areas or have a higher average daily income.
South Africa ranks 65th overall (out of 157 countries) with the most expensive fuel prices per litre, crossing us over the middle ground.
If South Africa’s petrol price rises above the R23.50p/l mark in the upcoming months, then we are in the top 50 most expensive countries for fuel. SA has always occupied near the cheapest countries around the middle-ground rather than the costliest ones – so this shift is concerning.
Which country has the highest petrol price in the world?
Petrol prices might be high in SA, but we are not even in the top 10. Here is a list of countries with the highest petrol prices.
Let’s take a look at petrol prices around the world in rands per litre from 13 June 2022.
Hong Kong: R47.68
Central African Republic: R38.05
Which country has the cheapest petrol in the world?
Did you know that Venezuela currently has the cheapest petrol price in the world?
Here is a list of countries that don’t pay much for petrol per litre, in fact, some pay as little as less than R1-per-litre.
Petrol prices in African countries
According to the average retail prices for gasoline in Africa as of March 2022 by country, Zimbabwe has the highest at 2.15 dollars per litre. Followed by the Central African Republic, Cape Verde, Seychelles, Malawi, and then South Africa at number 6.
On the flip side, consumers living in traditional crude oil producers in Africa, such as Egypt, Nigeria, Angola, Algeria, and Libya, spent less money on gasoline.
South African petrol prices are generally higher than its African neighbours except for Zimbabwe. Although all of Botswana’s petrol is imported from South Africa, its petrol price is $0.89, while Namibia has the lowest price at $0.87.
For interest’s sake, why is fuel cheaper in Botswana than in South Africa?
Botswana does not have to pay the tax duties and other things levied onto the petrol.
The impact of fuel prices on fleet businesses
Higher fuel prices have a direct effect on consumers impacting motor vehicle running costs, transport costs, and consumer goods. If you are running a fleet operation with multiple vehicles– fuel prices are one of the top expenses to take into consideration.
Cartrack, a leading SaaS fleet provider can give you actionable insights you can immediately use to reduce fuel costs.
Now is the time to get your hands on these fuel-saving features: