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Blog: 5 December 2017 (Rand cost per barrel of crude oil)
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We take a look at the monthly Rand value per barrel of oil paid since January 2010. While oil prices have been relatively low over the last 2 or so years, South Africans however have to keep up forking out more and more for petrol. Part of that is due to government''s continued increases in taxes on fuel (think fuel levy and road accident fund levi etc).
The other part of it is due to the exchange rate. We take a look at the impact the ZAR has had on the Rand price per barrel of crude oil since January 2010. |
Crude oil pipeline
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Crude oil per barrel vs ZAR vs Rand price per barrel
While it is possible to compare the US dollar price of crude oil per barrel to the ZAR/USD exchange raet and the Rand price per barrel of oil, it is easier to index the numbers to make it directly comparable. For the purpose of this analysis we index the numbers to January 2010=100. That is the price in January 2010 is set to 100 and the movement on a monthly after that is expressed relative to the January 2010=100. Thus if crude was $60 in January 2010 and $66 in February 2010, the index levels for January and February 2010 would be 100 and 110 respectively.
Indexing just helps making variables which might not be directly comparable directly comparable to one another. It also assists in easily calculating the growth from the base period (the period set to 100) to the last period. If January 2010=100 and December 2017 = 200, then the variable which is indexed has doubled over the time period in question.
Indexing just helps making variables which might not be directly comparable directly comparable to one another. It also assists in easily calculating the growth from the base period (the period set to 100) to the last period. If January 2010=100 and December 2017 = 200, then the variable which is indexed has doubled over the time period in question.
So while crude oil prices have declined by almost 20% since January 2010, the Rand price per barrel of rude oil has gone up by 51%. And a massive part of this is driven by the fact that the Rand has depreciated substantially since January 2010. Rand has depreciated by 88% since January 2010. Basically its almost twice as many Rands today for one US dollar as it was in January 2010. So the question is what would current fuel prices look like if it was indexed and added to the graphic above?
Fuel prices vs Crude oil per barrel vs ZAR vs Rand price per barrel
The graphic below is very similar to the earlier one, with the only difference being 95 unleaded petrol prices have been added to the graph in order to see how it compares to all the other variables that might have an impact on it's price.
Based on the latest petrol price announcement by the department of energy, the price of 95 unleaded (inland) has increased by 92.4% from January 2010 to December 2017. This growth in the price per litre of petrol outstrips the depreciation of the ZAR against the dollar, and its growth is far above that of the Rand price paid per barrel of crude oil, which has only gone up by 51% over the same time period. So while the Rand price paid per barrel of crude oil has increased by 51% from January 2010 to December 2017, the price of petrol at the pump has gone up by 92.4%. The likely cause of the divergence being government taxes (and continued milking of taxes on fuels) to try and plug budget deficit gaps.
Fuel levies are increased every single year to try and prop up and keep SANRAL afloat while they lose billions upon billions via E-tolls, and to keep funding the road accident fund, which everyone knows is a slush fund for attorneys to skim as much money off desperate and needy clients as they can.
Fuel levies are increased every single year to try and prop up and keep SANRAL afloat while they lose billions upon billions via E-tolls, and to keep funding the road accident fund, which everyone knows is a slush fund for attorneys to skim as much money off desperate and needy clients as they can.
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