Cape Town - A possible petrol and paraffin hike on the horizon may mean a bleak holiday season for already hard-stretched motorists and other consumers.
The Central Energy Fund’s (CEF) latest data projection indicates petrol users might have to dig deeper in their pockets this December, with figures showing an under-recovery for petrol which, for the month so far, averages R1.14 for 95 unleaded and R1.03 for 93 unleaded.
The CEF also projects paraffin will increase by about 43 cents per litre.
A slight decrease of 22c is projected for 500ppm diesel.
Official petrol price adjustments are expected to be announced by the Department of Energy at the end of the month and will come into effect on December 7.
Tracey-Lee Solomon, an economist from Stellenbosch University’s Bureau for Economic Research, said the petrol price increase predicted was largely as a result of increasing crude oil prices.
“For the month of October, Brent crude averaged around $93.60 per barrel.
So far, the crude price has averaged over $95 per barrel in November. Fortunately, a stronger rand has offered some relief.
“The US dollar weakened significantly after a lower-than-anticipated US consumer inflation print caused investors to downwardly adjust their expectations of where US interest rates could peak.
Markets are currently pricing in a 70% chance of a 50bps hike in December, which would break a streak of four 75bps hikes,” said Solomon.
She said an expected small decline in the diesel price could be aided by a decline in the price of refined products.
This was due to global diesel shortages that have resulted in significant price increases.
“Recently, the market shortfall has been somewhat narrowed after China, one of the world’s largest diesel exporters, lifted export quotas. In September, China’s diesel exports accelerated significantly. Exports were boosted to 1.73 million tons in September, up from an average of 460 000 tons per month between August 2021 and August 2022,” Solomon said.
Fighting Inequality Alliance SA national co-ordinator Wafaa Abdurahman said when petrol and paraffin prices increased, the burden was always mostly felt by the working class.
She said with the rolling blackouts, the approaching holidays would be devastating, especially for the unemployed.
“The cost of living is already difficult for many and if petrol increases it means the poor middle class will be squeezed further because it usually affects everything. Some people rely on paraffin, especially now with load shedding.
“This will be a bleak festive season and will be worse for unemployed people. A lot of people are currently suffering from food insecurity. Salaries are not increasing, but everything else is.
“There is no willingness by the government to provide a basic income grant so people can survive these harsh economic conditions.
“When January hits, people will be more indebted because many people travel home in December and transport will be expensive if these increases happen,” said Abdurahman.
Automobile Association (AA) spokesperson Layton Beard said the association was expecting to release its mid-month outlook on Tuesday.
Cape Times