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Cape Town - Fuel prices are expected to show big increases in December due to the continued rise in the global crude oil price and the further weakening of the exchange rate, independent economist Fanie Brink said on Monday.
Brink said that the latest information from the Department of Energy announced on Monday morning shows the prices of gasoline 93 (ULP & LRP) in Gauteng could possibly increase by 71.9 cents per litre on Wednesday December 6, while the price of diesel with a 0.005% sulphur content may increase by 61.1 cents per litre.
Brink said international sources indicate the average daily Brent crude oil price increased in November to its highest level since June 2015.
"The members of the Organisation for Petroleum Export Countries and Russia meet again later this week to decide on an extension of their 9-month agreement reached in July this year to bring about a better balance of international supply and demand by reducing its oil production," said Brink.
"Because of the further increase in the crude oil price, it is expected that the average international price of gasoline may rise by 45.7 cents per litre and the diesel price by 34.3 cents per litre."
The daily average rand/dollar exchange rate has weakened over the past month from about R13.80 to the dollar to about R14.20/$ due to political uncertainty and further economic deterioration, that caused a further downgrading in SA's credit status last week, according to Brink.
In his view, this weakening in the exchange rate is expected to result in an increase of 26.2 cents per litre in the gasoline price and 26.8 cents per litre in the diesel price.
Earlier this month the Automobile Association predicted a sharp jump in fuel prices at the end of November, with petrol projected to increase by 74 cents and diesel by 63 cents a litre.
It expects illuminating paraffin to increase by 75 cents a litre.
The AA based its projection on data released by the Central Energy Fund and said factors expected to make an impact on the pockets of SA consumers were the weak rand and increases in global oil prices.
"Concerns over government's fiscal discipline are likely to continue weighing heavily on the rand, and if these factors combine with continued oil strength, South Africans will face heavy fuel price hikes for the remainder of 2017 and into early 2018," the AA said in mid-November.
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