Cape Town - There is very little that South Africans can do about reported oil price rigging and the possible effect it could have on motorists, an expert told Fin24 on Wednesday.
"As we are at the end of the value chain on crude prices and pay what is available in the market, there is very little we can do except to support a probe into these allegations,” said Peter Noke, national director of the South African Petroleum Retailers' Association (Sapra).
He was reacting to international reports that oil prices may have been manipulated in the same way banks and traders rigged the Libor interest rates.
The Libor scandal erupted last month when Absa parent Barclays was fined a record amount for trying to manipulate the inter-bank lending rates by mis-reporting the amount it cost them to borrow, sometimes working with other banks.
International reports on Wednesday claimed that motorists could have been feeling the brunt of oil rigging by being overcharged at the pumps.
An official report for the G20 group of world leaders questioned the reliability of oil prices and warns that the market is wide open to manipulation, according to the reports.
The G20 report, published by the International Organisation of Securities Commissions (Iosco), warned that traders have opportunities to influence oil prices for their own profit.
According to Noke, international crude prices play a major role in the pricing structure of South African fuels.
For example the local pricing structure is based on two elements: BFP (basic fuel price) - elements within the BFP are based on international issues, among others international crude prices and the rand/dollar exchange rate (up to refinery gate); and domestic elements (from the refinery gate to end point).
"We import crude, because we do not have our own, except for Sasol fuels. They are remunerated at the same rate as a 'coastal refinery'." Petrol price hike expected in August
Noke feels fuel prices are too high internationally. However, in saying that, he says we need to remember that the final pump price is based on many elements.
"A large contributor within our fuel price make-up is taxes and levies which are determined by the government.
"Currently the total taxes and levies on 95 octane fuel in Gauteng amounts to 307 cents per litre (c/l). This is made up of levies and taxes (including the RAF): 289.5c/l; Central Energy Fund levies: 7.53 c/l and demand side levy on 95 octane: 10.0 c/l.
"Given all this, South Africa is by far not the most expensive on taxes of fuel in the world.
"One needs to bear in mind that all over the world governments tax fuel as an income generator that crosses all borders, types of vehicles, regions, provinces, race or creed,” said Noke.
Noke added that the latest fuel price indicators show for an increase of 12 c/l in the pump price of petrol and 8 c/l on diesel. “For the period under review, the average crude prices are $99.96 and the rand/$ exchange rate R8.24.
"However, there may well be a portion of the price allocated for the 'slate levy' (a levy paid by the motorists recovering money “owed” to the oil companies) that could be refunded, as the slate account is just about zero again.
"This amount could be between 4c/l and 6c/l."
how the fuel price is calculated. (Source: Sasol)