Transport companies, public transport passengers, and motorists will all need to brace for more hefty fuel price hikes in February, according to the Automobile Association (AA)…
After being battered by the coronavirus pandemic throughout 2020, many were hoping to get off to a more positive start in 2021. But as South Africa enters the second wave of the pandemic, there hasn’t been much reprieve.
And the fuel price hikes are set to empty even more pockets.
The Automobile Association (AA) released a statement commenting on unaudited mid-month fuel price data released by the Central Energy Fund.
According to the organisation, “unless the picture drastically improves by month-end, South Africa’s fragile economy is set for a major hit.”
“At this mid-month point, petrol is set for a whopping increase of 80 cents a litre, diesel is flagged for an increase of around 61 cents a litre, and illuminating paraffin for an increase of 63 cents.”
International prices are climbing consistently
“The problem is international oil prices, which have been consistently climbing with each passing day,” the Association says. “A general increase in positive sentiment as COVID-19 vaccines are rolled out has combined with upticks in global economic activity, pushing up demand for oil – and taking prices with it.”
The AA notes that the average exchange rate of the Rand against the US dollar has not, however, been a major contributor to the increases throughout the first two weeks of January.
“Despite some wild swings in the daily exchange rate, and the average rate creeping up from around R14.60 to just over R15.00, only four cents of the substantial predicted increases come from Rand weakness.”
The Association says an increase of this magnitude would make life harder still for transport companies and the many people whose livelihoods have been crushed by the economic carnage of COVID-19.
“With the Rand relatively strong by recent standards, the only hope for a reprieve relies on a pullback by oil. Unfortunately, the trend lines suggest that the situation may deteriorate further before month end,” the AA concludes.