By Annisa Essack
Motorists may be in for some slight relief at the pumps in June as the latest data from the Central Energy Fund suggests but the new carbon tax could nullify any savings.
The CEF’s data showed as, at 14 May 2019, a slight over recovery for 93 and 95 grades of petrol which points to a 5 to 7 cents per litre decrease on the cards come June.
Diesel, however, shows an under-recovery of 12 cents per litre as per the CEF data.
At these rates, we should see a drop in the price of petrol from R 16.62 (95 petrol) and R 16.42 (93 petrol) for June. Diesel owners will, however, see a jump to R 15.01.
June 5, will see the introduction of the new carbon tax, on the day that the new fuel price would kick in, adding 9 cents per litre to the price of petrol and 10 cents per litre to diesel.
So, even with an over-recovery in the petrol price, we will still experience an increase in the price of petrol next month.
The key drivers impacting the price of petrol in South Africa are the international petroleum prices, driven largely by oil prices as well as the rand/dollar exchange rate.
South Africa’s weakening Rand ahead of the elections has placed pressure on imports, a trade war between the USA and China leading to volatility in the global markets contributing to the under-recovery of the petrol price.
With economists predicting the oil price which is currently sitting at $71 per barrel, to reach $80 per barrel in the latter half of 2019, further price hikes should be expected. The worst-case scenario of about $90 per barrel with the price of fuel spiking to as high as R20 per litre.
Lullu Krugel, Chief Economist at of PwC explains that for every $1 movement in international oil prices, local prices are impacted by 25c in the same direction.