Holidaymakers will face significant financial strain as fuel prices are set to increase across all grades of petrol and diesel from New Year’s Day, this Wednesday.
The Department of Mineral and Petroleum Resources (DMPR) announced the following price adjustments:
- Petrol 93 (ULP & LRP): 19c increase
- Petrol 95 (ULP & LRP): 12c increase
- Diesel (0.05% sulphur): 7c increase
- Diesel (0.005% sulphur): 10c increase
- Illuminating paraffin (wholesale): 9c decrease
- Single Maximum National Retail Price for illuminating paraffin: 13c decrease
- Maximum LPGas Retail Price: 13c increase
Consequently, a litre of petrol 95 ULP, currently costing R21.47 in Gauteng, will now cost R21.59. At the coast, the price for 95 petrol will rise from R20.68 to R20.80 per litre.
The average Brent Crude oil price increased slightly from US$72.70 to US$72.78, influenced by OPEC+ decisions and low global economic growth.
The average international product prices of petrol increased, while middle distillates slightly decreased due to higher winter inventories in the Northern Hemisphere.
These factors contributed to higher basic fuel prices for petrol and diesel by 9.33 c/l and 2.93 c/l respectively, and a decrease for illuminating paraffin by 18.92 c/l.
Additionally, the Rand depreciated from 17.93 to 18.11 Rand per USD, further increasing petrol, diesel, and illuminating paraffin prices by 10.58 c/l, 11.11 c/l, and 10.90 c/l respectively.
“The average Brent Crude oil price increased slightly from US$72.70 to US$72.78 during the period under review. The main contributing factors are the OPEC+ decision not to increase production in December and continued oversupply by non-OPEC producers amid low economic growth globally,” the DMPR explained.
Impact on South African Market
The rise in fuel prices is expected to have a significant impact on the South African market. Higher fuel costs translate into increased transportation and goods costs, which inevitably affect the overall cost of living.
Economists predict a ripple effect where consumers will face higher prices for goods and services, straining household budgets even further.
Small businesses, especially those reliant on transportation, may experience increased operational costs, leading to higher prices for their products or services. This could potentially slow down economic growth as consumers may cut back on spending.
Global Implications
The fuel price hike in South Africa reflects broader global trends influenced by geopolitical factors and economic policies. The decision by OPEC+ not to increase production has kept global oil prices stable but slightly higher.
This situation, combined with the depreciation of the Rand, has exacerbated the impact on South African fuel prices.
Higher fuel costs globally can lead to increased inflationary pressures, particularly in emerging markets. This could result in central banks tightening monetary policies to curb inflation, potentially slowing down global economic recovery.
Quotes and Reactions
Local businesses and consumers have expressed concern over the rising fuel prices. A Cape Town small business owner remarked, “Every cent increase in fuel prices cuts into our profit margins. We’ll have to consider raising prices, which we know will hurt our customers too.”
Economist Sipho Ndlovu noted, “The increase in fuel prices is a double-edged sword. It affects both the cost of transportation and the cost of goods, leading to higher inflation. The timing couldn’t be worse as households are already struggling with the economic downturn.”
In conclusion, the upcoming fuel price adjustments are set to have a profound impact on both the South African market and the global economy. Holidaymakers and everyday consumers alike will need to brace themselves for higher costs as they usher in the new year.
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