Possible fuel gains wiped out by tax increases, says Automobile Association


Although fuel prices are predicted to drop in April, most of the benefit of the decreases will be wiped out by the increases in the general fuel, and Road Accident Fund (RAF) levies.

This is according to the Automobile Association, which was commenting on unaudited mid-month fuel price data released by the Central Energy Fund.

The general fuel levy will increase by 30 cents and the RAF levy by nine cents, on 1 April. Based on the current data, the association is predicting that petrol will decrease by 5 cents per litre, diesel by about 27 cents a litre, and illuminating paraffin by 32 cents.

“This means that while motorists may have expected the current price per litre of petrol to drop substantially, they will now only see it going down by around 12 cents a litre. Diesel users, on the other hand, will see an increase of 12 cents a litre, with the levies eating up any gains,” the association said.

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The association noted that international petroleum prices have continued to decline, leading to the expected drops at the end of the month.

“Opec’s reduction in its crude oil output targets has been countered by increasing global oil stocks held by non-Opec nations. This has gradually pushed the oil price down to near the levels it was maintaining before Opec’s output targets were adjusted, which is good news for South Africans.”

The association said the rand/US dollar exchange rate had remained nearly flat since the end of the month, meaning South Africans were likely to see most of the benefit of the oil price drops.

“The rand has shed around four cents against the dollar since the start of March. If this period of relative stability in the exchange rate continues, the currency will only have a small influence on the fuel price at month end.”

Belinda Pheto

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