Fuel increase on the cards

SUBSTANTIAL rand weakness could undo recent fuel price stability, stated the Automobile Association (AA) when commenting on unaudited mid-month fuel price data released by the Central Energy Fund (CEF).

In a press release the AA stated: “Until the crisis hit, the fuel price picture for August had been flat, with data predicting modest declines in all fuel types at month-end, thanks to reasonable stability in the rand and international oil prices.

“Mid-month data suggested a fall in petrol of around two cents, with four cent and eight cent drops predicted for diesel and paraffin respectively. However, the daily exchange rate for the rand fell nearly nine percent against the U.S. dollar in two days after the news of Turkey’s troubles broke, and remains well above its recent trend.

“This has tipped petrol towards a likely increase for September, and substantially offset the gains made by diesel and paraffin.”

The AA further said that the fuel price trajectory towards the end of August would depend on factors largely beyond South Africa’s control and that motorists should not count on the moderate trend of the past six weeks continuing, advising them to economise where at all possible.

The extent and duration of the recent currency weakness will be pivotal in South Africa’s short-term fuel price outlook.

Upon hearing about the potential increase, disgruntled motorist Babro Naidoo said: “The ongoing increase in fuel prices hits the average man where it hurts the most and that is in his pocket. With rising fuel prices, everything, including basic commodities, go up. So it affects everyone, including the person who does not own a vehicle.”