Fuel prices could jump to record highs in June - AA

31-05-2018
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Fin24
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The Automobile Association (AA) said on Thursday that it expects fuel prices will jump to record highs in June.

Petrol is expected to rise by up to 85 cents a litre, diesel by 87 cents and illuminating paraffin by 82 cents.

This is because of stronger international oil prices and a large deficit carried over from April.

The AA was commenting on unaudited month-end fuel data released by the Central Energy Fund (CEF). The association also pointed out that the rand traded in a fairly narrow band against the US dollar throughout May.

However, international oil prices have come under strong pressure, accounting for two-thirds of the price rise which will come into effect on June 6, in the AA's view. "The Department of Energy’s monthly close-out happened early due to the public holidays in April, after which the rand lost almost 60 cents against the dollar in a matter of a day," the AA explained in a statement.

"This meant a substantial fuel price rise was a near certainty from the start of May."

Of particular concern to the AA is the expected increase in the price of paraffin. This increase comes following several fuel hikes and increases to other commodities and services the past few months which have "hit the poorest the hardest", in its view.

The AA also noted that this increase comes at a time when many people will rely on paraffin for heating in the winter months. "There appears to be some possibility of lower oil prices in the medium term with the Organisation of the Petroleum Exporting Countries (OPEC) discussing a production increase," said the AA.

"However, this will rely on a stable rand for fuel users to feel the benefit, which is not certain at this stage. We advise fuel users to expect further hikes and continue to economise in all ways possible."

In May the price of petrol increased by 49c a litre. Diesel (0.05% Sulphur) increased by 59c/l, while diesel with 0.005% Sulphur went up 58c/l.

The wholesale price of illuminating paraffin increased by 52c/l in May, whereas the single maximum national retail price (SMNRP) of illuminating paraffin increased by 69.00c/l. The maximum retail price of LPGas increased by 70c/kg.

Government said the main reason for the fuel price adjustments in May was due to the contribution of the rand/dollar exchange rate.