In June, the total increase in fuel prices after four months may well exceed R8 per litre for petrol.
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Farmers, logistics companies, motorists – and, in the end, all consumers – can look forward to a drop in diesel prices in June, but petrol will once again increase.
The mid-month numbers released by the Central Energy Fund currently show an overrecovery (in other words, a decrease, if prices were to change today) of R4.41 on the wholesale price of diesel with 0.05% sulphur, and R3.52 on 0.005%.
The over- and underrecoveriers are for the first two weeks of the four-week period, which will determine June’s fuel prices. The period ends on 28 May, and the rand-dollar exchange rate and the dollar price of fuel on international markets could fluctuate.
The overrecovery on wholesale paraffin is R4.37 per litre.
On the downside, there is a small underrecovery in petrol prices of only 19c per litre for 95-octane and 14c for 93-octane. This is not the full picture, however.
Added to the over- and underrecoveries, the fuel levy relief of R3 per litre on petrol and R3.93 per litre on diesel will be cut in June, meaning motorists will have to pay R1.50 per litre more for petrol even before the underrecoveries are added, and R1.96 per litre will be deducted from the overrecovery on diesel.
There will also quite possibly be an adjustment of the slate fund levy, which was instituted in May at R1.23 per litre. It could be maintained, cut, or increased, depending on the state of the slate fund – the money used to compensate wholesalers when prices they pay on a daily basis increase after regulated prices were frozen for the month. It is backdated by two months, meaning the slate levy for June will apply to the massive April increases.
June’s expected increases will be the fourth monthly rise in petrol prices.
In Gauteng, 95-octane petrol increased by 20c per litre in March, R3.06 in April, and R3.27 in May, bringing the total increase over the past three months to R6.53 per litre. This could be upped to more than R8 per litre for the four months up to June, depending on the fuel and slate levy decision.
The wholesale price of 0.05% sulphur diesel in Gauteng increased by 52c per litre in April, R7.37 in April, and R5.27 in May, for a total thus far of R13.26. It will shrink to about R6.
Interestingly, the rand is currently countering the increase in international fuel prices, although only by about 10c to 13c. The rand has strengthened mildly, by 1.4%, over the past two weeks.
The price of Brent crude oil remains above $100 per barrel, but has fallen by a not-insignificant 3.4% over the past two weeks. The cost of finished fuel products, however, continues to escalate amid refining constraints and rising shipping costs.
Motorists will know shortly before the fuel price change date of 3 June by how much prices will increase, when it is officially announced by the Department of Petroleum and Mineral Resources.
The SA Reserve Bank’s top brass has, in the past few months, expressed concern that the fuel price increases may feed through to broad-based price increases, and many economists are now pencilling in interest rate increases in both May and July. The next interest rate decision is on 28 May.
A previous version of this article incorrectly noted an underrecovery on diesel, instead of the reported overrecovery. News24 regrets the error.
