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Petrol will cost more next month – but it could have been worse: AA

Petrol price set for another increase.
Petrol price set for another increase.

Brace for another petrol price increase‚ but also thank your lucky stars because it could have been much‚ much worse.

So said the Automobile Association (AA) on Thursday as it released its fuel price outlook for July.

Petrol prices‚ the AA said‚ are expected to rise by 26 cents a litre next month‚ diesel by 24 cents and illuminating paraffin by 20 cents. This in spite of South Africans being “thrown a lifeline” by declining oil prices.

“Without oil's decline‚ the fuel price hike for July would have been far higher‚” the AA said‚ particularly as the rand continued to lose value against the dollar.

“The average rand/dollar exchange rate used to calculate the basic fuel price has slipped in a virtually straight line since the start of June. The month began with the rand at around R12.65 to the dollar‚ but the average currently stands at nearly R13.30.

"Fortunately‚ international oil prices have retreated at a similar rate‚ resulting in a fairly moderate fuel price increase outlook for July‚” the AA said.

International petroleum prices (oil) and the rand's strength against the US dollar are the two primary factors which influence the fuel price on a monthly basis.

"If oil had remained flat in June instead of declining‚ price increases of 40 cents a litre would have been likely for July. And if it had followed its upward path of May‚ the increase would have been nearly 80 cents‚” the AA said.

The Department of Energy is expected to formally announce the fuel price increases on Friday.

“Given the increased cost of fuel in South Africa‚ the AA again urges government to reconsider the high cost of the added taxes which account for up to one third of the petrol price. Currently R5.30 of every litre of petrol is paid towards the General Fuel Levy and the Road Accident Fund Levy‚” the AA said.

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