Analysts have advised consumers to expect a significant spike in petrol price next month. This comes when the government’s gasoline charge returns next month.
Analysts have also warned that the government will be powerless to further cushion society because the increase will most likely be driven by circumstances beyond its control.
The government’s delay of the general fuel levy coming to an end – an inevitable hike of R1.50 per litre — has created an economic perfect storm. With a strengthening dollar, a weakening rand, and rising international crude oil costs, South Africans could see the price of gasoline climb to R3.50 per litre by the end of the month.
According to Businesslive, economist Dawie Roodt remarked, “Based on information, the petrol price would have climbed by almost R2 a litre in any case about two days ago.”
“We are talking about R2 plus R1.50, bringing it to R3.50. That is the increase likely to be seen per litre in June.”
This means that, depending on the grade and geography – coastal vs inland — the country’s already cash-strapped motorists might be paying as much as R25.50 per litre.
The root cause for Petrol price hike in South Africa
Oil prices soared as a result of events in Ukraine, adding fuel to an already burning fire. South African oil prices have risen as a result of this but thats not the only risen to the rise of petrol prices according to experts. Some experts predict that future petrol costs will range from R25.50 to R40.00 per litre.
Sanisha Packirisamy, an economist with Momentum Investments, believes the ongoing conflict between Russia and Ukraine is to blame, but she also believes there are a few pre-existing factors that contributed to the current fuel price panic.
“Before the war between Russia and Ukraine, the world economy was growing to the point where demand in many instances had outpaced supply,” said Packirisamy according to Businessinsider. “Organisation of the Petroleum Exporting Countries Plus (OPEC+) did not manage to increase oil production to levels that could satisfy the increase in demand.”
Packirisamy claims that due to anticipated shortages, purchasers began purchasing even more goods, driving the price even higher. Furthermore, she stated that ongoing conflict in the Middle East between Yemen and Saudi Arabia has contributed to supply uncertainty, putting greater pressure on oil prices to rise.
Packirisamy said the situation in Ukraine has likely aggravated the country’s fuel problems by creating a dramatic jump in international oil prices. She indicated that if the battle continues and increases, the price of oil will rise significantly, but that if a settlement can be made, oil will fall back to levels seen at the beginning of the year.
Is there a solution to Petrol price increase
According to Packirisamy, the international price of oil is mainly beyond of South Africa’s control, which is sad. This is contingent on global demand as well as geopolitical risk factors that influence global supply.