AA warns of hefty fuel price jump

Cape Town - January 2017 will see the first of what the Automobile Association (AA) expects to be a series of fuel price hikes in the New Year.

The AA said on Thursday that unaudited month-end fuel price data released by the Central Energy Fund (CEF) showed substantial price increases for all types of fuel.

"The rand has weakened against the dollar since mid-December, while international petroleum prices have continued their upward march," the AA said.
 
"However, despite the rand's recent weakness, it was comparatively strong in the first half of December, and the anticipated fuel price rise is entirely attributable to petroleum strength."

The AA added that if international petroleum prices had remained unchanged from November, South African fuel prices would actually have dropped by around two cents a litre in the New Year. Instead, petrol is expected to increase by 51 cents a litre, diesel by around 40 cents and illuminating paraffin by 43 cents.

"It is too early to know at what price level oil supply will match demand in the wake of the Organisation of the Petroleum Exporting Countries (Opec) decision to cut production," the AA commented, adding that it expected 2017 to be a difficult year for motorists.

Earlier in the week independent agricultural economist Fanie Brink estimated the price of gasoline 93 (ULP & LRP) in Gauteng could possibly increase by 47.2 cents per litre on Wednesday 4 January and the price of diesel with a 0.005% sulphur content could go up by 34.9 cents per litre.

Brink said the Opec agreement has caused the price of Brent crude oil to increase to almost $56 a barrel over the last couple of weeks.

"This has increased the international petroleum product prices at some of the largest international refineries at the coast of the Mediterranean Sea, Singapore and the Arabian Gulf on which the landed cost of domestic fuel prices are based," said Brink.

Brink added that the rand/dollar exchange rate had only a small positive impact on the prices in December 2016.