Cape Town – The pump price of petrol will rise by 52 cents a litre (c/l) for all grades, while diesel will increase by a whopping 76c/l, the department of energy announced on Monday.
The main reasons for the spike are the continued upward march of international petroleum prices and the weakening rand/US dollar exchange rate.
Last month, petrol 95 (both ULP & LRP) went up by 88c/l and 93 (both ULP & LRP) increased by 86c/l.
The wholesale price of illuminating paraffin will increase by 62c/l, while the single maximum national retail price will increase by 83c/l.
The maximum retail price of LP gas will also go up by 98 cents per kilogram.
The Automobile Association (AA) warned on Friday that motorists should brace themselves for further spikes in the coming months.
The combination of firmer oil prices and a weaker rand has exposed the consumer to the full force of oil’s strength, the AA said.
On Monday the rand was trading lower at R15.76 against the greenback and Brent crude oil was flirting with the $50 mark, selling for $49.74 a barrel. On Thursday, world oil prices breached the $50/barrel mark for the first time in over six months on signs that the surplus is coming to an end.
The Department of Energy (DoE) said in a statement on Monday that the weakening of the rand against the US dollar increased the contribution to the Basic Fuels Price on petrol, diesel and illuminating paraffin by 22.1c/l, 20.65c/l and 20.39c/l respectively.
“The average rand/US dollar exchange rate for the period 29 April 2016 to 26 May 2016 was 15.2048 compared to 14.6477 during the previous period,” the DoE said.
The AA expressed concern over the steady rise in oil prices in the current weak rand environment, notwithstanding international opinion that global oversupply could see prices pull back.
“With South Africa’s weak economy, our concern is that even if oil prices moderate, further declines in the rand will mask the benefit. It is possible that fuel prices will test new highs in the coming months, placing yet more stress on consumers,” the AA said.
Article credit: http://www.fin24.com/Economy/huge-hike-in-petrol-diesel-prices-20160530