Petrol and Diesel Costs Rise
By Thabo Mosia
South African motorists will face higher fuel costs as they return home from holiday travels, with all grades of petrol and diesel set to increase from Wednesday, 1 January 2025. The Department of Mineral Resources and Energy (DMRE) announced these adjustments, which also include a rise in the price of liquefied petroleum gas (LPG) and a decrease in the cost of illuminating paraffin.
Detailed Fuel Price Adjustments
The specific changes effective from 1 January 2025 are as follows:
• Petrol 93 (ULP & LRP): Increase of 19 cents per litre.
• Petrol 95 (ULP & LRP): Increase of 12 cents per litre.
• Diesel 0.05% sulphur: Increase of 7.5 cents per litre.
• Diesel 0.005% sulphur: Increase of 10.5 cents per litre.
• Illuminating paraffin (wholesale): Decrease of 9.5 cents per litre.
• Single Maximum National Retail Price for illuminating paraffin: Decrease of 13 cents per litre.
• Maximum LPGas Retail Price: Increase of 13 cents per kilogram.
These adjustments mean that in Gauteng, a litre of 95 ULP petrol will rise from R21.47 to R21.59, while at the coast, the price will increase from R20.68 to R20.80 per litre.
Factors Influencing the Price Adjustments
The DMRE cited several factors contributing to these changes:
1. Crude Oil Prices: The average Brent Crude oil price saw a slight increase from US$72.70 to US$72.78 during the review period. This uptick is attributed to OPEC+’s decision not to raise production in December and an ongoing oversupply by non-OPEC producers amid sluggish global economic growth.
2. International Petroleum Product Prices: Petrol prices mirrored the upward trend of crude oil, while middle distillate prices slightly decreased due to higher inventories for the Northern Hemisphere’s winter season. These dynamics resulted in higher contributions to the basic fuel prices of petrol and diesel by 9.33 cents per litre and 2.93 cents per litre, respectively, and a lower contribution to illuminating paraffin by 18.92 cents per litre.
3. Rand/US Dollar Exchange Rate: The Rand depreciated against the US Dollar, averaging R18.11 per USD compared to the previous period’s R17.93. This depreciation led to increased contributions to the basic fuel prices: petrol by 10.58 cents per litre, diesel by 11.11 cents per litre, and illuminating paraffin by 10.90 cents per litre.
4. Implementation of the Slate Levy: The cumulative slate balance for petrol and diesel was a positive R4.303 billion at the end of November 2024. Consequently, the slate levy remains unchanged at zero cents per litre in the price structures of petrol and diesel.
5. Octane Differentials Between 95 and 93 Petrol Grades: Adjustments to the differential between 95 and 93 octane grades are made quarterly. Changes in the Basic Fuels Prices (BFP) octane differential have led to varying retail prices for these grades across different fuel-pricing zones.
6. Restoration of the Magisterial District Zones (MDZ): With the completion of repair work at the Port of Port Elizabeth, the port is now operational. Temporary changes to the MDZs, implemented since October 2024 due to the port’s closure, will revert to their original configurations effective 1 January 2025.
Impact on Consumers
The increase in fuel prices is expected to have a ripple effect on the cost of goods and services, as transportation expenses rise. Consumers are advised to budget accordingly and consider fuel-efficient practices to mitigate the impact of these adjustments.
Global and Local Economic Context
The slight increase in Brent Crude oil prices reflects global market dynamics, including production decisions by oil-producing nations and overall economic conditions. Locally, the depreciation of the Rand against the US Dollar has further influenced fuel costs, highlighting the interconnectedness of global markets and domestic economic health.
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