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Latest fuel prices in South Africa (yet another record high)
Date: 1 October 2018 Category: Economics |
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In this article we will take a look at the latest fuel prices and the impact the weak exchange rate and higher crude prices have had on the fuel prices in South Africa in recent months, with the latest increase pushing South African fuel prices to yet another record high, making life even tougher for South African consumers and South Africa's half dead economy.
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So the fuel price story is pretty sad? Oh yes. And its getting even sadder.
The line graphs below shows the monthly retail petrol price for 95 Octane petrol at the Reef (inland) vs the 95 Octane petrol price at the coast. The reason the prices are different is due to the fact that South Africa's refineries are located close to the coast, and shipping costs to get the fuel inland accounts for the difference in prices between coastal areas and inland areas. Inland, where most of South Africa's fuel is bought, as the majority of vehicles are found in Gauteng, will see record high fuel prices per litre of R17.07 a litre. Up 99c from the price paid in September 2018.
The October 2018 fuel prices are officially the highest retail fuel prices ever in South Africa, beating the highest fuel prices in history of the previous month and the month before that. Fuel prices have been increasing steadily over recent months and the latest announcement on the October fuel prices blows previous months increases out of the water. Now there are a few factors that are contributing to the higher fuel prices: They include:
- Weak exchange rate (see our Rand/Dollar exchange rate page for Rand dollar exchange rate history). A weaker exchange rate means it costs South African petroleum firms more for crude oil. The higher this cost, the higher the price of petrol.
- Increase in world crude oil prices. OPEC tensions, and talk about Saudi Arabia needing oil prices around $80 to a barrel has lead to the increase in crude oil prices, which for a few years were just hanging around the $50 a barrel. Its currently trading at over $75 a barrel
The funnel chart above shows exactly how the R16.02 per litre of 95 Octane petrol at the reef is obtained for the July 2018 fuel price. A summary of this is shown below:
Basic fuel cost: R7.96
Fuel levy: R3.37
Road accident fund (RAF): R1.93
Other fees such as transport costs, wholesale and retail profit margins etc: R2.76
So basically 50% of the current petrol price is made up by taxes, levies, transport costs and profit margins of the wholesalers and retailers. The actual cost to produce a litre of petrol is less than R8, yet we as South Africans are paying R16.02 a litre of 95 Octane at the reef. Note the values refer to the July 2018 prices, but the fact remains a large chunk of the petrol prices paid is made up by government taxes. Sadly our tax money isn't spent effectively so it makes paying such high taxes on fuel a very bitter pill to swallow for most South Africans.
There is a old saying the only thing we as humans cannot avoid is death and taxes. Well currently South Africans are being taxed to death.
Basic fuel cost: R7.96
Fuel levy: R3.37
Road accident fund (RAF): R1.93
Other fees such as transport costs, wholesale and retail profit margins etc: R2.76
So basically 50% of the current petrol price is made up by taxes, levies, transport costs and profit margins of the wholesalers and retailers. The actual cost to produce a litre of petrol is less than R8, yet we as South Africans are paying R16.02 a litre of 95 Octane at the reef. Note the values refer to the July 2018 prices, but the fact remains a large chunk of the petrol prices paid is made up by government taxes. Sadly our tax money isn't spent effectively so it makes paying such high taxes on fuel a very bitter pill to swallow for most South Africans.
There is a old saying the only thing we as humans cannot avoid is death and taxes. Well currently South Africans are being taxed to death.