By Lehlohonolo Lehana.
The Central Energy Fund released the latest fuel price increases effective from Wednesday, 2 March.
The fuel prices for March will be adjusted as follows:
- Petrol 95: increase of R1.46 per litre;
- Petrol 93: increase of R1.46 per litre;
- Diesel 0.05%: increase of R1.44 per litre;
- Diesel 0.005%: increase of R1.48 per litre;
- Illuminating Paraffin: increase R1.21 per litre.
Mineral Resources and Energy Minister Gwede Mantashe said the rising crude oil prices were due to the escalating crisis between Russia and Ukraine, which led to a surge in crude oil prices amid supply fears.
“Subsequent sanctions on Russia by the USA and UK have contributed to the increase in crude oil prices.
“The Organisation of Petroleum Exporting Countries (OPEC) and non-OPEC members are still not meeting production targets agreed leading to lower supplies of crude oil and an increase in prices,” a statement from the Department of Mineral Resources and Energy said.
Oil rose further in early morning trading on Friday (25 February) due to concerns that financial sanctions on Russia may impede global fuel supply chains, following a wild session in which prices spiked more than 9% before giving up gains.
Brent crude climbed around 3% after surging above $105 a barrel at one point in Thursday’s dramatic trading.
Futures pared most of that advance as US President Joe Biden made it clear that Western powers were not willing to sacrifice their own economies to penalize Moscow for its invasion of Ukraine.
“The initial concerns that oil would be caught up in any sanctions on Russia has eased, resulting in prices pulling back from Thursday’s rally,” said Daniel Hynes, a senior commodity strategist at Australia & New Zealand Banking Group.
“However, steep discounts being offered for Russian crude are still not receiving bids. This suggests there may still be some supply issues if banks can’t facilitate trade in the short term.”
While South African motorists are expected to pay for a hefty increase in petrol from next week, the government has indicated that it will step in to review how the country’s fuel price is calculated.
In its Budget Review published on Wednesday (23 February), National Treasury said it will review South Africa’s fuel price calculations as motorists grapple with record-high petrol and diesel costs.
“The two largest components of administered price inflation – electricity and fuel prices – increased by an annual average of 8.2% between 2011 and 2021, placing financial strain on households.
“Regular reviews of prices and their underlying methodologies help policymakers understand inefficiencies in pricing models and additional costs imposed on society, and create incentives for competitive outcomes.”
The Automobile Asociation (AA) of South Africa described the government’s decision not to increase fuel levies and review the petrol price calculations as a landmark win for consumers.
“This is a landmark win for all consumers – not only motorists – and while fuel prices may still increase the additional burden of higher taxes is now out of the way. We are naturally extremely happy that our calls have been heeded.”
The AA said finance minister Enoch Godongwana’s announcement that he and Mantashe have agreed to review all aspects of the fuel price is an equally welcome development.