A continued increase in local fuel prices over recent months has left motorists in a tight spot.
The most recent price increase on 2 March — of R1.46 per litre for unleaded petrol and up to R1.48 per litre for diesel — pushed the petrol price to a historic high of above R20 per litre at the coast, and R21 per litre inland. This is according to the Automobile Association (AA) in a press release on 28 February.
The last five years have seen a gradual climb in the petrol price in South Africa. GRAPH: Karla van der Merwe
“For South Africa, the international brent crude oil price plays the largest role [in determining the fuel price]. When the price of brent oil increases, our petrol price usually increases,” said Tracey-Lee Solomon, a junior economist at the Bureau for Economic Research in Stellenbosch. “Another important factor is the exchange rate and the strength of the rand. Because we buy oil on the international market, a stronger rand makes oil cheaper, all else remaining constant.”
The red bear in the room
The AA attributed the current rise in international petroleum prices to Russia’s invasion of Ukraine in their aforementioned press release. The association stated that the increases could have been more severe if the Rand had not stabilised against the US Dollar recently.
“In terms of supply, Russia is among the top three producers of oil in the world,” explained Solomon via email correspondence with MatieMedia. “[Disruptions] to their production would decrease world supply. Sanctions on Russian oil would increase demand for oil from other countries, lifting the price.”
South Africa is currently experiencing record-high fuel prices, yet indications are that further increases will come in April. PHOTO: Karla van der Merwe
She explained that the Russia/Ukraine conflict impacted the exchange rate because investors exit their positions in emerging markets during times of uncertainty. This led to a rise in fuel prices and currency depreciation in these markets.
“Due to the rising price of South Africa’s key export commodities, including coal, palladium and gold, we have been shielded,” said Solomon. “In fact, the Rand has strengthened since the conflict began and had it not been for its appreciation, the rising oil price would have hit us even harder.”
Stephen Chikoma, a petrol pump attendant at the BP garage on Merriman Avenue, also attributes the rise in fuel prices to the Russia/Ukraine conflict. “The more they fight there, the more the petrol will continue to rise.”
Studente sonder sente
With the recent fuel price increases, filling up one’s car might mean having to redo your monthly budget. INFOGRAPHIC: Karla van der Merwe
For those commuting in and out of Stellenbosch, the rise in petrol prices will continue to hurt for some time to come.
Gretchen Müller, a fourth-year LLB student at SU, commutes from Simondium to Stellenbosch to attend her classes. “I would much rather go to class in-person but it does not benefit me to spend R100 on petrol and R40 on parking (or the occasional R500 fine if I stop somewhere where I am not allowed),” said Müller. “There is no one in my area who needs to be in Stellenbosch at the same time I am, so a riding club is out of the question.”
Bad moon rising
In another press release from 17 March, the AA predicted further increases at the start of April. “Current data is projecting fuel prices to touch on R24/l for petrol and R23.60 for diesel.”
Commuters might feel the pressure on their pockets when planning trips as the fuel price continues to climb. PHOTO: Karla van der Merwe
“If realised at month-end, these will be the biggest increases to fuel prices in South Africa’s history and will, undoubtedly, have major ramifications for all consumers and the economy in general,” said the AA in the press release.