The Automobile Association (AA) has predicted that the price of petrol will increase significantly in the coming month.
In contrast, the price of diesel is set to drop, it said, commenting on unaudited mid-month fuel price data.
“In a dramatic reversal of last month’s oil swings, international product prices used to calculate South Africa’s basic fuel price have nearly doubled since their lows at the end of April,” said the AA.
“Over the same period, the rand has settled in around the level of R18.40 to the US dollar, almost R3 weaker than just three months ago prior to the advent of the COVID-19 panic and multiple downgrades of our economy by ratings agencies.”
Fuel price changes
Current data analysed by the AA shows the price of fuel could change as follows:
- Petrol – 50c per litre increase
- Diesel – 56c per litre decrease
- Illuminating Paraffin – 75c per litre decrease
The AA added that the differences in the price movements of different fuels are probably due to imbalances in global refining capacity.
This is because the oil industry had to deal with unprecedented oversupply in the first week of May, the AA said.
It added that fuel price volatility such as this is likely to be substantial and long-lasting.
“We advise motorists who are re-drawing their budgets to take nothing for granted,” said the AA.
South Africans can cope
The AA said that despite this, South African motorists have “some unusual capacity” to absorb fuel price increases, as most fuels are currently about R4 cheaper than they were at the start of 2020.
Additionally, motorists are driving far less than usual due to the national lockdown.
“Our concern, of course, is that the financial situation of many South Africans has changed for the worse in the last two months, with massive job losses and talks of across-the-board salary cuts,” said the AA.
“This could make South Africans sensitive to even small fuel price increases.”