Motorists should brace themselves as the price of petrol is set to sky-rocket to its most expensive yet come Wednesday.

According to the latest increase announced by the Department of Energy (DoE), the price of unleaded 93 petrol will therefore rise 99c‚ unleaded 95 R1 and diesel R1.24. Illuminating paraffin will cost an additional R1.04 and liquefied petroleum gas (LPG) R1.79.

The price change comes into effect on midnight on Tuesday.

The Automobile Association (AA) warned on Thursday that the “unprecedented price increases” would be “catastrophic for road users”.

“They are the biggest in South African history. The major culprit is South Africa’s chaotic economic policy‚ which has left us defenceless against upticks in international oil prices,” the AA said in a statement.

Oil and currency
Higher petrol prices are a combination of a rise in global international oil prices and a depreciation of the local currency.

In August‚ government dipped into the slate-levy fund to offer relief for consumers. The result was a minor 5c increase to the petrol price to cover the salaries of petrol attendants. But energy minister Jeff Radebe said at the time that the intervention was a “one-off”.

Economists are bracing for the worst amid uncertainty over global oil production and supply‚ which may be affected when sanctions imposed by the US on the world’s third-largest oil producer‚ Iran‚ take full effect in early November. Economists and commodity market analysts expect the Brent crude oil price to rise to at least $90 to $100 a barrel before the end of 2018.

How this will impact the fuel price for South Africans is unclear‚ given that the rand is also a factor.

RMB expects the rand to stabilise at R14.20 to the dollar by year-end and for oil prices to trade in a similar range as they are currently‚ “all adding up to a broadly unchanged fuel price‚ but with risks to the upside”.

Nedbank’s Corporate and Investment Banking unit forecasts the rand-dollar exchange rate to remain above R14 to the dollar to the end of the year and for the petrol price to rise to touch R17.50 a litre over the same period‚ provided there is no further government intervention or a hike in oil prices far beyond $80 a barrel.

Sumad said: “For 2019‚ we see petrol prices rising to at least R18.90 per litre if the rand remains weak and the Brent price remains above $75 per barrel.”

[Source: Times Live]