The Automobile Association (AA) claims that the government’s today-announced fuel price adjustments will severely hit already financially strapped consumers and put additional strain on an already fragile economy.
A R2,57 increase to 95ULP gasoline in Gauteng will increase the cost of this fuel to R26.74, and an R2,37 increase to 93ULP will increase the cost of this fuel to R26.31, both of which are new record high prices, according to the adjustments announced by the Department of Mineral Resources and Energy (DMRE) today.
The data indicates that the primary cause of the increases is the fluctuation in global oil prices.
The average value of the Rand increased against the US dollar in June, which prevented the basic increases from being higher by about 20 cents per litre.
The ongoing conflict in the Ukraine, which adds to supply and demand pressures, continues to be a significant factor in the rise of global petroleum prices. Fuel price increases in South Africa and other nations are still probable as long as this conflict is unresolved.
“In addition to the increases to the basic fuel prices, the R1.50 relief off the General Fuel Levy (GFL) given by the government for May and June, was halved for July which adds to the increases. This means the increase of R1.82 to 95ULP is, effectively, an increase of R2.57. This, and other increases announced today, will certainly negatively impact on all South Africans and will, undoubtedly, play a big role in the economy going forward,” notes the Association.
The Association claims that while the government is under increasing pressure to come up with a solution to the rising cost of fuel, short term relief is not sustainable.
“We understand that government has little leeway in terms of international petroleum prices and the Rand/US dollar exchange rate, which is why we have called, and will continue to press, for a review of the fuel price, an area where the government has control over the fuel price. There is a need to interrogate all the components of the fuel price, to determine whether all these components are still necessary in the existing formula, and to establish if the current calculations of these components are correct. The longer this review is not initiated, the longer the country will wait for lasting solutions,” notes the Association.