Fuel prices have been on a rampant rise in South Africa in 2022 with motorists now paying over 19% more per litre of petrol and up to 40% more per litre of diesel in December than in January.
This is owing to factors such as a depreciating rand, increasing oil prices, the Russia-Ukraine war, and an annual raise in margin costs.
Petrol
Fuel prices in general rose sharply in 2022 mostly due to a fast-depreciating local currency and rapidly-increasing oil prices.
On 31 December 2021, the rand was trading at an average of R15.93 per US dollar, while during the entire November 2022 it averaged R17.53/dollar – which is down from the highs of around R18.40/dollar reached in October.
Similarly, Brent Crude oil traded at approximately $77.50 per barrel on 31 December 2021, whereas it sat at $87/barrel on 30 November 2022, after coming down from a peak of around $123/barrel in March.
Additionally, in November the South African Department of Mineral Resources and Energy approved a net increase in annual margin adjustments of 21.26c/l for petrol and 0.67c/l for diesel.
Fuel prices felt the pressure of these inputs throughout 2022 and although petrol has come down by around R3.20 (12%) from its peak in July, it is still R3.80 (19%) more expensive per litre at inland rates than it was in January.
Detailed in the graph below are the inland prices of Petrol 93 and 95 between January and December 2022, as provided by the Automobile Association:
Diesel
The story for diesel reads a little bit differently. The rise in prices of this fuel coincides with that of petrol for the same reasons mentioned above, though diesel peaked above its more refined counterpart for the first time in 14 years in September 2022 due to unique market conditions affecting it more acutely.
After diesel passed the R23 mark in June it didn’t dip below again, mostly due to the simple rule of supply and demand, according to TreasuryOne.
Diesel occupies a smaller part of the market than petrol and due to the Russia-Ukraine invasion affecting global fuel supply and with the Eurozone approaching winter months at this time, stockpiling diesel to use for machinery, home heating, and emergency supply became a necessity throughout the second half of the year for many market participants.
Another uniquely South African issue is that we have Eskom which has become highly reliant on diesel to provide electricity and stave off the worst of the loadshedding stages, with this potentially affecting prices on a local scale.
These elements have seen the prices of diesel rise to be between R6.64 (38%) to R6.98 (40%) more expensive per litre at inland rates in December than in January 2022.
Detailed in the graph below are the inland prices of Diesel 500ppm and 50ppm between January and December 2022, as provided by the Automobile Association:
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