The Automobile Association (AA) has warned motorist to brace for fuel price hikes of catastrophic proportions at the end of October for November.
The AA says the recent exchange rate and commodities data has shown petrol going up by 99 cents a litre, and diesel and illuminating paraffin higher by a whopping R1.42 a litre.
The AA says the hikes in diesel and illuminating paraffin would be the largest in South African history, adding that the prices is only based on half a month’s data.
“R20 a litre for petrol is now a realistic scenario before the end of 2021. Brent Crude has broken through the 85 US dollars per barrel mark and the basket of oil prices used to calculate South Africa’s oil price are following Brent higher. We note the concern this is generating in the USA, where President Biden was reported to have called on the OPEC+ cartel to increase oil output to stabilise prices.”
The AA says there is also uncertainty regarding changes to the Slate Levy.
“The under-recovery to date this month has been vast, and the government will, in our view, have no option but to increase the Slate Levy to recover this deficit, making for a bigger hike. South Africans are paying at the pumps for weak governance, as one of the key indicators of the price of fuel depends on the exchange rate.”
The AA says it does not expect the oil price squeeze to ease in the short term, especially as the demand for oil will increase as the north enters its winter season.