As October 2023 approaches, South African motorists are bracing themselves for a significant surge in petrol prices, continuing a pattern that has persisted throughout the year.
UPDATE: The latest data from the Central Energy Fund (CEF) indicates 95 Unleaded petrol is on course to close off the month with an average under-recovery of just less than R1 for both grades of petrol. If this trend continues, the eventual increase could be under 80 cents.
Petrol price forecast for October 2023: Massive hike on the cards
PLEASE NOTE: The petrol price adjustments listed below are directly quoted from the Central Energy Fund’s daily tracking of the basic fuel price (BFP) and do not necessarily reflect the final petrol price determined on the first Wednesday of every month. Despite our best efforts to ensure accurate reporting, it is still the sole responsibility of the reader to double-check petrol prices. Swisher Post, its parent company, partners and affiliates shall not be held liable for any consequence that arises from the journalistic duties performed in sharing this content
According to the latest data from the Central Energy Fund (CEF), South African motorists should prepare for potential fuel price increases in October 2023.
These forecasts are based on the current oil prices and the exchange rate of the rand against the dollar.
The CEF’s data indicates that diesel prices may see an increase of approximately R2 per litre, with the precise adjustment depending on the grade.
For unleaded petrol, both 95 and 93 grades could experience hikes of R1.23 and R1.15 per litre, respectively.
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If these projections materialise, it would bring petrol prices to levels not witnessed since July 2022, as reported by the Automobile Association (AA).
However, it’s important to note that these forecasts are subject to change, and the final petrol prices for October 2023 will only be determined on Wednesday, 4 October 2023.
South African petrol prices are primarily influenced by international oil prices, which are denominated in dollars, and the exchange rate of the rand.
The AA notes that up to 80% of the anticipated increase in petrol prices can be attributed to the surge in global oil prices.
Similarly, higher oil prices are responsible for up to 86% of the expected diesel price hike.
Brent crude oil, a key benchmark, is presently trading at around $94 per barrel, compared to $84 a month earlier. This represents a more than 30% increase in Brent crude oil prices since their recent low point in March 2023.
Contributing to this surge in prices, countries like Saudi Arabia and Russia have reduced their oil production, placing upward pressure on oil prices.
Some analysts even anticipate Brent crude oil prices to exceed $100 per barrel in the near future.
While the weakened rand-to-dollar exchange rate has some impact on fuel price increases, its influence currently remains relatively modest compared to the rising trend in oil prices.
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The rand has depreciated from approximately R18.58 to the dollar at the beginning of the month to the current rate of R19 per dollar.
The AA characterises the outlook as somewhat grim, although it has improved slightly since the start of the month. With two more weeks until the official fuel price adjustment for October 2023, many South Africans are hoping for continued downward movement in these factors.
While price increases in October 2023 appear certain, the ultimate question is the extent to which fuel prices will rise.
Please note that these forecasts are based on current data and may be subject to change based on global oil market dynamics and currency fluctuations.
What goes into the final retail price of fuel in South Africa?
Determining the final retail price of petrol in South Africa relies heavily on the rand’s performance in currency markets and oil price movements.
Using this information, the CEF can formulate basic fuel price (BFP) estimates which, in essence, offer South African importers a snapshot into the cost of buying petrol from an international refinery, transporting the product and ensuring it against possible losses at sea and on land.
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However, before the retail price of petrol is finalised at petrol stations, several additional costs are included in the BFP:
Government levies
- IP tracer levy (reimbursement to the oil industry for buying IP tracer dye and injecting it into IP to curtail the mixing of IP and diesel)
- General Fuel levy (tax levied by the government)
- Slate levy (to finance the cumulative under-recovery of the industry)
- RAF levy (to compensate for people involved in road crashes and accidents)
- Petroleum products levy (reimbursement to the pipeline users for the applicable NERSA tariff on transporting fuel through the pipeline)
Additional costs
- Wholesale margin (markup to the price of a product to account for wholesaling costs)
- Service cost recoveries
- Storage, handling and delivery costs
- Distribution costs
- Dealers margin (commission to the fuel pump dealers for retail operation)
- Zone differential (applicable to inland regions)
- Customs and excise duty
Monthly adjustments to fuel prices are made on the first Wednesday of each month based on these factors. The next changes will take effect on Wednesday, 2 August 2023.