The Automobile Association (AA) has pointed to ominous oil price data as the main cause of increased fuel prices.
THE AUTOMOBILE Association (AA) has pointed to “ominous oil price data” as the main cause of increased fuel prices.
In commenting on the latest fuel price hikes for February announced by the Minister of Mineral Resources and Energy (DMRE), the association said increasing the price of illuminating paraffin in particular will hit poor people the hardest.
The AA said much of this population relies on this fuel for lighting, heating and cooking.
According to the organisation, the rapid strengthening of benchmark crude oil prices to nearly $90 (R1,384.6) a barrel is a major factor.
“The last time Brent Crude touched current levels was in October 2014, more than seven years ago. A combination of factors is pushing oil higher, not least the imbalance between supply and demand as the lower-than-expected economic impact of the Omicron Covid-19 variant pushes economic activity higher, and crude production lags,” said the AA.
“In addition, there are political jitters around the Ukraine, which could see a switch to increased oil use throughout the EU if Russia restricts natural gas output in response to sanctions threatened by the USA and United Kingdom.”
The AA said the strength of the rand relieved the burden of the increases somewhat, noting that without the rand’s recent strength against the US dollar the price hikes would have been around 25 cents higher than they are.
“While the decrease in fuel prices for January was naturally welcomed, we remain convinced that a review of fuel prices in South Africa is necessary. The increases for February are significant and push our country’s fuel prices near record territory again and will, undoubtedly, have a knock-on impact on other consumer products and services.”
#ReviewTheFuel, a petition by the AA, is gaining momentum with close to 25,000 people having already signed the petition urging government to initiate a review of all the components of the fuel price as well as conduct an audit of all existing elements to determine if they are still applicable and correct.
“Our call is for the Minister of Finance to announce such a review in his Budget Speech in Parliament on February 23 as a first step towards mitigating against rising fuel costs, effectively for the benefit of all South Africans.”
– BUSINESS REPORT
