Before you break open the champagne over the latest petrol price cut, you’ll want to take a few things into consideration.
We told you that South Africans could be getting an early Christmas present when analysts predicted a cut in the cost of fuel last month.
While it’s nice to see the price going down rather than up, it doesn’t change the fact that 2018 has seen the biggest increases ever, driven by raised taxes, higher global oil prices, and an unstable rand.
Here’s Business Insider:
Even with this welcome 11% reduction from November’s R17.08/l peak for 95 Octane inland, you will still be paying the seventh-highest price ever for petrol in South Africa.
This cut pales into insignificance when you consider the dramatic reduction in fuel prices between July 2008, when the price hit double digits for the first time, and January 2009 – when the price fell by 40% from R10.70 at the peak of the global financial crisis, to its lowest levels in the past decade of R6.01/l.
Regardless of what happens to oil prices or the exchange rate in the future, the government has piled charges onto the basic cost of fuel, which means that the price of fuel will never be that low again.
Petrol in 2009 averaged out at R7,39 a litre. This year the average price is R15,42 a litre – more than double the price in the space of a decade.
The reasons are numerous. The rand is weaker now than it was then, and the oil price is higher. But the reality is that about R7.50 of every litre of petrol sold in South Africa is made up of a basket of fixed prices determined by government in the form of taxes, the Road Accident Fund, and fees for everything from transporting it to pumping the stuff into your car.
2011 was the first time that petrol prices averaged more than R10 a litre. It continued to rise up until the end of 2014 when prices lowered again, the rand went up, and average prices stabilised.
Fast forward to 2018, where we’ve seen a whopping 13% increase in the average price of petrol – R13,66 in 2017.
Still, there is an expected saving in the cost of petrol over the Christmas season. If you’re filling up your 50-litre tank on the new price, and embarking on a 2 500 kilometre trip, you could be looking at a saving of R500.
This cut is going to be particularly beneficial to the taxi industry and logistics firms. However, long-term trends predict that, although we could be looking at a brief period of stability when it comes to fuel prices, they will go up again.
They always do.
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