Motorists are no doubt relieved to see a decrease in the fuel price for October. However, the Road Freight Association and farming associations have raised concern about another increase in the price of diesel.
MOTORISTS are no doubt relieved to see a decrease in the fuel price for October. However, the Road Freight Association and farming associations have raised concern about another increase in the price of diesel.
The Minister of Mineral Resources and Energy, Gwede Mantashe, announced on Monday that the price of petrol would drop 89c a litre for 93 ULP and LRP; and decrease by R1.02 per litre for 95 ULP and LRP.
For diesel, 0.05% sulphur has gone up by 10c per litre and 0.005% sulphur has increasd 15c per litre. The price of illuminating paraffin (wholesale) has decreased by 61c per litre.
Mantashe said that the main reasons for the fuel price adjustments were due to a decrease in the crude oil price.
He said the reason for the increase in the price of diesel was due to high demand.
A spokesperson for the SA National Taxi Council, Sifiso Shangase, said that the fuel price decrease would enable the taxi industry to use the savings for other expenses.
Gavin Kelly, the CEO of the Road Freight Association, said that continuous increases in the price of diesel would inevitably drive up the cost of transport and logistics.
“With roughly 85% of all goods moved around the country having a road leg at some point, there will be increases to consumers as the cost to transport goods increases.”
Kelly added that fuel costs long breached the 50% mark in daily operating costs during the second quarter of the year, and now ahead of the final quarter, it was already hovering at around 55%.
Kelly pointed out that the majority of road freight transporters used diesel for their vehicles.
“They need to increase their pricing to cover the ever-increasing cost of diesel. There are transporters who will not be able to carry on – whose customers will now begin to flinch or refuse the cost of transport. Obviously this will impact their businesses.”
Kulani Siweya, the chief economist at AgriSA, said that while the petrol price decrease was welcomed, there was a “rocket-feather phenomenon” regarding the diesel prices.
“Prices shot up like a rocket, but are coming down like a feather and this is at a time when demand for diesel is ticking up owing to the fact that farmers are now into the planting season in the summer rainfall areas. Farmers would definitely welcome further respite in the coming months, especially if you consider that they’ve had to contend with above inflation increases of other inputs.”
Professor Irrshad Kaseeram, of the University of Zululand’s economics department, said the increase in the diesel price was concerning.
“A decrease in the petrol price will bring much needed respite to motorists. However, the diesel price will rise marginally. This is bad news for most of our long haulage transport system as costs will continue to be high which will translate into higher goods costs which will be passed on to consumers,” he said.
“Although the petrol price is decreasing, these benefits will not see a reversal in the related costs over the past 5 months, eg minibus taxi rates, but over time it will have a dampening effect on further increases until the system is shocked again by further drastic increases.”
The executive chairman of the SA Farmers Development Association, Siyabonga Madlala, said that almost every operation a farmer did was dependent on diesel.
“With all the rising costs and now an increase in the price of diesel, it is not sustainable for farmers,” Madlala said.
“We need the government to intervene and help. The diesel rebate that we receive as farmers is not enough. We also need to start looking at alternatives, such as biodiesel.”
