November petrol price hikes were announced by the Department of Mineral Resources and Energy this week and the news does not bode well for motorists in South Africa.
November petrol price set to soar
In a statement, the department conceded to external mitigating factors as the chief reason behind this year’s biggest fuel hike thus far. The weakening rand in global currency markets, matched with volatile movements of crude oil is, in part, responsible for November petrol price increases which, from midnight on Wednesday 3 November 2021, will rise by:
- R1.21 per litre for petrol (93 and 95);
- R1.48 per litre for diesel (0.05% and 0.005%)
- R1.45 for illuminating paraffin
“The key driver is the higher global demand recovery, amid a weaker supply response from non-OPEC (Organisation of the Petroleum Exporting Countries) and other oil producers. The situation was exacerbated by the impact of the current gas challenges experienced by European countries,” the energy department noted.
How monthly fuel prices are calculated
The price of petrol in South Africa is determined by a number of factors. First, and possibly most relevant, is the movement of prices in Brent crude oil, the raw material needed to make fuel.
In October 2021 alone, oil prices surged to R1 285.64 ($83.40) per barrel, up from R1 163.86 ($75.50) in September 2021, the biggest jump the commodity’s experienced in three years.
The strength of the South African Rand also plays a role in petrol price determinations. The nature of the political environment at any given time, the performance of the Johannesburg Stock Exchange (JSE) and other socioeconomic factors play a role in the fluctuation of our currency and, in turn, this affects petrol prices.
Perhaps, the only contributing factor to petrol price fluctuations within the government’s control is the cost of fuel levies. According to the Automobile Association of South Africa (AA), the South African government charges the following levies on top of the basic fuel price:
- General Fuel Levy (GFL) = R3.93 p/litre as of April 2021
- Road Accident Fund Levy (RAFL) = R2.18 p/litre as of April 2021
- State Levy (SL) = 15c p/litre as of October 2021