The Automobile Association (AA) has revised its second and final fuel price estimation for May by predicting a bigger increase than initially expected.
Commenting on the final unaudited data report released by the Central Energy Fund on 29 April, the AA said its expects the price of fuel to decrease by R1.74 a litre, diesel by R1.56 and illuminating paraffin by R2.18 come 6 May.
Attributed to not only the Coronavirus but also plummeting international oil prices, the second record decrease in as many months, despite the woeful performance of the Rand, will see the price of petrol drop to below R13 a litre for the first time since July 2017 and within range of prices last seen seven years ago when the respective two month predictions are taken into account.
In this regard, the inland price of 93 unleaded will have dropped by R3.84 a litre, 95 unleaded by R4 and diesel by R3.49 a litre.
“The Rand has been pummelled by COVID-19 and the Moody’s downgrade to junk status, and yet we are still able to predict record-territory fuel price drops. This goes to show just how severely the world oil price has collapsed,” the AA said in a statement.
It however warned that the oil price crush, although beneficial to motorist, will be hardest felt by the country’s fuel retailers.
“The margins on fuel low, and with usage plummeting, we believe many retailers will struggle to stay viable going forward,” the association said.
“It is nearly impossible to predict what might come next in the fuel market. If the ongoing oversupply forces world oil prices further downwards, we might see at-the-pump fuel costs decline to levels last seen a decade ago or longer. But if demand suddenly increases, the reverse could also happen and prices could spike – although from a lower base,”