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- South Africans are currently paying 9%, about R1.50 per liter, less for gasoline than a year ago.
- This is due to the moderating impact of the pandemic on oil demand.
- One expert believes another gasoline price cut is expected in December.
- For more stories, visit www.BusinessInsider.co.za.
As South Africa approaches peak driving season, fuel prices remain considerably cheaper than a year ago.
The global coronavirus pandemic, which has drastically slowed travel, reduced demand for oil, which, in turn, led to a record cut in gasoline price of R2 / liter in April this year.
The price of inland 95 gasoline (unleaded) hit a low of R12.22 in May, but as the oil market started to recover, prices gradually increased to R15.18 in September. Two outages followed and from midnight tonight, 95 gasoline will be on sale for R14.59.
This is still more than 9% – almost R1.50 / liter – lower than a year ago, when gasoline was retailing at R16.08 per liter.
Unleaded 93 gasoline, which sold at R15.66 a liter in November 2019, now costs R14.39, a drop of more than 8%.
Diesel prices experienced the biggest drop in the last year and prices (for 50ppm) fell almost 17%.
Fuel prices in South Africa are determined by the rand and oil prices, as the country imports most of its oil, which is priced in dollars.
This week’s cut was due to oil prices hitting a five-month low recently, as the market worried about the impact on fuel demand as England, France, Germany and Belgium returned to hard lockdowns.
Price of Brent crude. Source: Markets Insider
If the rand remains stable, local fuel prices could take at least one more cut, just in time for South Africa’s peak travel season.
“There will almost certainly be a decline in gasoline prices in December. Our forecasting models show a 60 percent drop per liter, allowing a small margin of error, ”explains Jayson Dunne, director of commodities at Bastion Advisory. “However, what we saw in April is unlikely to be repeated. We will not see oil prices fall to the lowest mark of $ 20 again. “
Dunne added that global markets had learned from the April slump and had since adjusted to better regulate supply. Similarly, secondary blockages are not expected to be as severe as before, and freight transport and trade are unlikely to stop.
While the pressure on the pumps eased in 2020, motorists were warned of impending fuel tax increases. The general fuel tax currently represents R3.77 for each liter of gasoline purchased, while the Road Accident Fund (RAF) extracts another R2.07.
Finance Minister Tito Mboweni, who recently alluded to tax increases during his Medium-Term Budget Policy Statement, is expected to increase both the general fuel tax and the RAF tax to recoup losses inflicted on government coffers. during the expensive closing period.
Mboweni will reveal the details of the fuel rate increases during his speech on the 2021 budget, which is expected to be delivered to Parliament in February. The changes to both levies will take effect in April 2021.
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