South African motorists can expect more pain at the pumps as the Automobile Association of South Africa predicted further substantial fuel price hikes at the end of October.
The AA said on Monday that unaudited mid-month fuel price data released by the Central Energy Fund point to a 40c a litre increase in the price of petrol while diesel and paraffin could spike by 70c and 65c a litre respectively.
"International oil prices remain stubbornly high and it is possible that current tensions involving Saudi Arabia, one of the world's biggest oil producers, could place more pressure on fuel prices,” the Association said.
“More welcome news is that the Rand is working in South African's favour, and the recent firming of our currency against the US dollar has taken some of the bite out of oil's rally".
The AA said that the predicted increase in the price of petrol must, for now, be seen against the backdrop of the Department of Energy’s proposal to set a maximum price for the sale of 93 octane ULP and LRP fuels.
This would allow fuel retailers to set their own prices below the maximum amount indicated by the government, and may, depending on the margins, ease the burden on users of the two identified fuels.
The AA warned that the country cannot continue to be hammered by massive fuel price hikes without severe economic knock-on effects, warning that “the effect on bus and taxi operations could lead to fare hikes which exceed commuters' ability to pay”.
"We again call on the government to prioritise economic policies which inspire investor confidence. A stronger and more stable Rand is the country's only defence against the vagaries of the international oil price," it concluded.
