While the price of petrol is expected to increase by 50 cents per litre, diesel is setting the opposite trend and is predicted to decline by 56c per litre by next month.
This according to the Automobile Association (AA) commenting on the latest unaudited mid-month fuel price data released by the Central Energy Fund.
“In a dramatic reversal of last month’s oil swings, international product prices used to calculate South Africa’s basic fuel price has nearly doubled since their lows at the end of April,” the AA explains.
“Over the same period, the Rand has settled in around the level of R18.40 to the US dollar, almost three Rand weaker than just three months ago prior to the advent of the Covid-19 panic and multiple downgrades of our economy by rating agencies.”
The AA says that despite this, South African motorists currently have some unusual capacity to absorb fuel price increases, with most grades of fuel around four Rand a litre cheaper than at the start of 2020. Motorists are also driving far less due to the ongoing 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. This could make South Africans sensitive to even small fuel price increases,” the Association comments.
The Association says the differences between the movements for different fuel prices are likely to be related to imbalances in global refining capacity in the first week of May as the oil industry came to grips with the unprecedented April oversupply and price crashes.
It says it expected fuel price volatility to be substantial and long-lasting as the world economy adjusts to the new reality of a spreading pandemic.
“We advise motorists who are re-drawing their budgets to take nothing for granted,” the AA concludes.
Tags: Diesel Fuel price Petrol