Steep fuel price increase set for motorists in November 2021.
Mid-month data from the Central Energy Fund (CEF) shows that fuel prices could see significant increases in November on the back of the global energy crisis and a weaker rand.
The data made available by the CEF to 14 October shows an under-recovery in both petrol and diesel prices, pointing to a possible increase of between 95 and 98 cents per litre for petrol and over R1.40 per litre for diesel.
The mid-month changes are as follows:
- Petrol 95: increase of 98 cents per litre;
- Petrol 93: increase of 96 cents per litre;
- Diesel 0.05%: increase of R1.41 per litre;
- Diesel 0.005%: increase of R1.42 cents per litre;
- Illuminating Paraffin: increase R1.42 per litre.
The Central Energy Fund (CEF) has stressed that the daily snapshots are not predictive and do not cover other potential changes like slate levy adjustments or retail margin changes, which the department determines.
The Department of Energy makes adjustments based on a review of the whole period. Furthermore, the outlook can change significantly before month-end.
Prices are affected by two main components – the rand/dollar exchange rate and charges to international petroleum product costs, primarily driven by oil prices.
At mid-October, a weaker ZAR/USD exchange rate is contributing to an under-recovery of around 23 cents per litre for all fuel types, with changes to international product prices adding to the pain.
Differences in price and refining costs for petrol and diesel create a divergent path on pricing, with diesel seeing an over-recovery of R1.17 per litre in product price changes, while petrol shows an over-recovery of 72 to 74 cents per litre.
The rand firmed on Friday and made a 3% weekly gain thanks to a softer dollar and higher commodity prices, while stocks inched up only slightly.
On a positive note, the local currency shrugged off mixed domestic economic data, including August manufacturing and mining numbers, which reinforced the view that the economic recovery from the Covid-19 pandemic has been uneven across sectors.
Despite this strengthening, the rand is yet to recover the R14.50 level which it saw at the end of September, contributing to the under-recovery in fuel.
Brent crude surged as high as $85.10 a barrel on Friday (15 October), a price that would have seemed unthinkable just 18 months ago, when Covid halted global mobility and trashed demand.