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Sunday / 14 July 2024
HomeNewsOfficial petrol price increases for September announced

Official petrol price increases for September announced

The Department of Mineral Resources and Energy (DMRE) has announced the official fuel price increases that will take effect on Wednesday, 6 September.

All grades of fuel in the country are experiencing an uptick in costs, with petrol prices seeing a hike of R1.71 per litre across the board, while diesel prices are going up by a minimum of R2.76 per litre.

The largest driver behind these considerable increases is rising international product prices for petrol and diesel, which comes off the back of a voluntary output cut of one million barrels of oil per day by Saudi Arabia, the world’s largest oil producer.

The adverse performance in oil rates contributed around R1.35/litre to the price of petrol and between R2.44-2.53/litre to the price of diesel for September.

The Rand’s depreciation against the US Dollar during August dealt another considerable blow to the upcoming price changes.

The average exchange rate for the period 28 July to 31 August stood at R18.6731/dollar, compared to R18.2801/dollar the month before, leading to a higher contribution to the Basic Fuel Prices of petrol and diesel by 29.60c/l and 31.33c/l, respectively.

The Minister of Mineral Resources and Energy has also approved a retail margin increase of 5.0c/l to be effected in the retail price structures of all octane grades of petrol from 6 September, which is necessary to accommodate the wage increases of administrative staff, cashiers, and pump attendants at filling stations, said the DMRE.

With these inputs taken into account, fuel prices in South Africa this Wednesday will be adjusted as follows:

  • Petrol 93 – Increase of R1.71 a litre
  • Petrol 95 – Increase of R1.71 a litre
  • Diesel 0.05% – Increase of R2.84 a litre
  • Diesel 0.005% – Increase of R2.76 a litre

In line with the provisions of the self-adjusting Slate Levy mechanism, the Slate levy on petrol and diesel will remain at 0.00c/l for September.

Call to get spiralling fuel prices under control

A recent report by economists from the South African Reserve Bank (SARB) details four measures with which government can take control of South Africa’s constantly rising fuel prices.

These include:

  • Reviewing how inland transport costs are determined
  • Removing or updating several outdated elements of the basic fuel price calculation
  • Reviewing the viability of the Road Accident Fund (RAF) against alternative approaches such as third-party insurance
  • Reviewing the methodology for calculating retail margins and instating a “maximum” instead of a regulated petrol price

Referring to retail margins, which have now been adjusted for September, the economists said the petrol station forecourt industry employs around 70,000 people nationally, with forecourt employee numbers growing by 19% and cashier numbers by 52% between 2015 and 2020.

During this time, sales volumes remained mostly stagnant, resulting in attendant wages accounting for 44c of every litre purchased and being one of the main causes of rising fuel prices.

However, the social cost of reverting to self-pumping stations would be too high, given the large number of citizens working at these stations.

The economists therefore note that government could manage retail margin costs by adjusting the portion received by owners, applying a more frequent and transparent approach to calculating retail margins to determine the root cause for their sudden ballooning, and implementing the proposals made by the DMRE in 2018, which would reposition the regulated petrol price as a maximum price, allowing retailers to set prices below the petrol price.

The table below shows how September’s fuel price adjustments will reflect at the pump:

Fuel type Inland Coastal
Petrol 93 R24.14 R23.42
Petrol 95 R24.54 R23.82
Diesel 0.05% R23.05 R22.32
Diesel 0.005% R23.28 R22.59

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