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Good news for motorists this Spring! South Africans who’ve been buckling under the constant pressure of petrol hikes, will now get some relief in September 2022.
The Automobile Association of South Africa (AA) indicated that 95 unleaded petrol is expected to drop by around R2.60 per litre, while 93 unleaded might go down by R2.45 per litre.
The wholesale price of diesel per litre is expected to decrease by around R2.30 and the price of illuminating paraffin by almost R2.00.
So the cost of petrol should sit at around R22.00 per litre from September onwards.
What a relief for SA motorists, so let's dive into this news further.
How much is petrol in South Africa currently?
Before August 2022, the petrol price of 95 unleaded was R26.09 inland, whereas 93 unleaded was R26.31. The wholesale price of 50ppm diesel was R25.25 inland.
On the 3rd of August 2022, the petrol price per litre in rands came down by R1.32 per litre, and the Diesel petrol price per litre dropped slightly, between 88 and 91 cents per litre.
The price reduction left petrol sitting at R25.095 per litre in August.
And now the petrol price drop in September leaves us with higher hopes.
Why is there a sudden fuel price decrease?
The main reason for the reverse in fortunes in September is the drop in international oil prices, which fell from around $110 a barrel at the start of July to $100 a barrel by the end of the month, since the invasion of Ukraine. Brent crude (the global benchmark for oil) has fallen by more than 10% since the start of July. Due to the response to high international prices, the oil demand has started to weaken.
Local fuel prices are determined by international oil prices, as well as the dollar-rand value, as South Africa buys oil in dollars. However, despite the drop, the weakening rand versus the US dollar has kept local prices under pressure.
Also, motorists should note that the government has reinstated the fuel levy back to the price it was in May 2022, due to the recent fuel price decrease.
What does this mean for motorists?
The seesaw ride in fuel prices over the past year has shown just how great the impact of international petroleum pricing and the rand/US dollar exchange rate has on the lives of ordinary citizens.
On the upside, the petrol price decrease brings in South Africa, is a huge positive for both cash-strapped consumers and the economy in general, as it will lower the price of other consumer goods.
However, motorists should be aware that the oil price is extremely volatile, and there could be another hike lurking nearby. As such, it is advisable to not prepare to splurge and to continue budgeting for everyday expenses.
Who controls the fuel prices in SA?
The fuel prices are usually adjusted on the first Wednesday of a month, which is determined by various price elements (domestic and international) until you pay the final price at the pump.
The petrol retail price is regulated by the government, and the new monthly price is done by the Central Energy Fund (CEF) on behalf of the Department of Energy (DOE).
Here is exactly how the petrol price is calculated and the various parties involved in the monthly petrol price adjustments:
Basic Fuel Price (BFP). This is the price a South African importer would buy fuel for from an international refinery, and resell it on home ground.
General Fuel Levy (GFL). This is the tax added to every litre of petrol that is sold.
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 fuel at a retail price (when you fill up at a petrol station).
Road Accident fund (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.
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.
Fuel trends in other African countries
South African fuel prices are on an upward trend, but out of interest, let’s compare them to other neighbouring African countries.
According to GlobalPetrolPrices.com, Africa’s most expensive fuel is to be found in Seychelles. As of June 2022, South Africa was in the top 6 out of other African countries paying the most for fuel.
On the 22nd of August, our close neighbour Botswana was paying 17.17 Botswana Pula per litre or 1.34 USD (R22.55) for fuel. Zimbabwe is in the top 4 highest and is currently paying 1.62 USD per litre (R27.26).
Out of extra interest, does South Africa supply Botswana with petrol? Yes, although all of Botswana’s petrol is imported from South Africa, their fuel prices are generally less. The reason for this is that there are fewer taxes, tariffs, and fees on the fuel price.
South Africa also exports fuel to other markets, such as Namibia, Lesotho, as well as Swaziland.
What SA's major fuel price relief means for fleet business owners
Fuel is the second-largest expense for most businesses. In fact, fuel can represent up to 60% of operating costs in a company’s total fleet budget.
Many companies around the globe, rely on their fleets for transportation methods, daily operations, and to keep their businesses afloat. When fuel prices increase and fluctuate, it has an immediate impact.
If a company has a fleet management platform, not only is it a solution to manage and reduce fuel consumption but gives fleet owners peace of mind, when prices are so volatile and there is a major fuel price increase.
But, there’s more fuel saving is important for your fleet because it:
Reduces overall fleet operating costs
Limits harmful carbon emissions to benefit the environment
Benefits the health of the communities
Increases the lifespan of your fleet vehicles
No matter what happens with the petrol price per litre in South Africa in 2022, you’ll need to be fuel-savvy to ensure you don’t waste fuel unnecessarily.
Cartrack’s fleet management solutions can help you achieve this goal – talk to us today about how we can save you costs.
Relief for South African motorists! Petrol price relief coming in September 2022, easing the burden of constant hikes. Drive with ease this Spring!