After two months of record price decreases at the pumps, the Automobile Association (AA) has predicted a mixed picture for June on the back of recovering international oil prices and the worsening Rand.
Commenting on unaudited data released by the Central Energy Fund on Friday (15 May), the AA said that while current data points to a sharp increase of 50 cents a litre in the price of petrol, both diesel and illuminating paraffin will continue to decline with the former set to drop by 56 cents and the latter by 75 cents.
“In a dramatic reversal of last month’s oil swings, international product prices used to calculate South Africa’s basic fuel price have nearly doubled since their lows at the end of April. Over the same period, the Rand has settled in around the level of R18.40 to the US dollar, almost three Rand weaker than just three months ago prior to the advent of the Covid-19 panic and multiple downgrades of our economy by ratings agencies,” the AA said.
Attributing the price differences to an ‘imbalance in global refining capacity in the first week of May’, the Association however expressed concern at the idling economy in spite of the fuel price having dropped by nearly R4 a litre since the start of this year due to the impact of the Coronavirus enforced lockdown.
“Our concern, of course, is that the financial situation of many South Africans has changed for the worse in the last two months, with massive job losses and talks of across-the-board salary cuts. This could make South Africans sensitive to even small fuel price increases. We advise motorists who are re-drawing their budgets to take nothing for granted,” it concluded.