The dollar exchange rate and a global increase in the prices of petrol, diesel and illuminating paraffin is the reason why motorists will pay a lot more for petrol next week, according to the Department of Energy.
On Wednesday, the price of both grades of petrol will increase by 45c a litre, while diesel will increase by 63c a litre, it said in a statement. That means inland motorists will pay R13.05 a litre and coastal motorists will pay R12.57 a litre for petrol. Inland motorists will pay R11.34 a litre for diesel and coastal motorists will pay R10.96 a litre.
The department said the main reasons for the hike were the following:
- The contribution of the rand/US dollar exchange rate: “The rand strengthened slightly against the US dollar from R14.00 to R13.99, on average, during the period under review when compared to the previous one.”
- The global increase in the prices of petrol, diesel and illuminating paraffin: “These increases were in line with the increase in the price of crude oil.”
- The increase in the prices crude oil: “A key factor that contributed to the increase in the prices of crude oil was the fact that OPEC talked publicly about the possibility of production restraint and together with the possibility of Russia also following suit,” it said. “Although nothing concrete has as yet been decided and certain OPEC members, Iraq in particular, are looking to be exempted from any cuts.meeting in Algeria, which was planned to take place on 28 September 2016.”
The increase is in line with what the Automobile Association (AA) said on Friday and with mid-month expectations. Despite the improved stability of both oil and the rand, consumers will therefore still be in for strain at the pumps, the AA said.
Commenting on unaudited month-end fuel price data released by the Central Energy Fund, the AA said the recent strengthening of the rand against the dollar has not been enough to prevent a hefty fuel price hike for November.
The local unit incurred heavy losses at mid-month in the wake of the decision by the National Prosecuting Authority to charge Finance Minister Pravin Gordhan.
“The deficit has not been made up, even though the rand has been slightly stronger in the last ten days. In the time being international petroleum prices, which had been steadily rising in the first two weeks of October, have flattened out somewhat, which is encouraging,” said the AA.
“We once again urge organs of government to exercise the utmost caution in dealing with economically-sensitive issues which can severely impact on working-class citizens.”
*story by news24.com