Ongoing oil strength, with limited support from the exchange rate, has set the stage for further increases in the fuel price, the Automobile Association (AA) warned on Friday.
Commenting on unaudited mid-month data released by the Central Energy Fund, the AA said the data predicts a rise of up to 27 cents a litre for petrol and 61c/litre for diesel. Illuminating paraffin is also under pressure, with the data currently showing a 60c rise.
The AA warned that economic shocks which weaken the exchange rate could worsen the picture by month-end.
The association said the stronger rand/dollar exchange rate has not been enough to counter the rise in world oil prices, “giving a risk of substantial fuel price hikes at the beginning of July”.
On June 1 the pump price for all grades of petrol went up by 52c/l and in May motorists had to fork out a whopping 88c and 86c respectively for 95 ULP and LRP and 93 ULP and LRP.
The price of petrol has already gone up by 152c since March this year.
The main reasons for the spike are the continued upward march of international petroleum prices and the weakening rand/US dollar exchange rate.
On Friday just before 10:00 the rand was trading at R15.23/$, while Brent Crude Oil was trading at $47.82/barrel.
With the cold of winter having set in, people who use paraffin for heating and cooking are poised to experience a sharp jump in their energy costs, along with a rise in transport-related costs, the AA cautioned.
It advised South African motorists to reconsider their driving patterns and car sharing habits to economise, should the current run of fuel price hikes continue in the medium term.
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Credit: Fin24
