South Africa petrol price going up

greenspun.com : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread

Fill 'er up now: petrol price going up

By Murray Williams

April 01 2000 at 10:37PM

This week's whopping fuel price increase of 27c a litre will hit consumers' pockets hard.

Economists believe the increase in the price of petrol, diesel and paraffin will have a ripple effect on the economy with prices rising across a wide range of goods.

On Wednesday the price of petrol goes up 27c to R3,22 a litre, diesel by 25c to R2,74 and paraffin by 14c a litre.

But there is some good news - unless the rand does a nosedive, petrol prices are expected to settle again later this year.

It will now cost R161 to fill a 50-litre fuel tank, R13,50 more than at present.

The increase is expected to wipe out most of the tax benefits announced by Finance Minister Trevor Manuel in his budget.

The increases are the direct result of decreased crude oil production by Opec countries, the rand's recent loss in value against the American dollar and the South African government's decision to increase rail and road transport tariffs by 5c a litre for petrol and 3c a litre for diesel.

The latest increase pushes the petrol price 46% above the R2,20 a litre of March last year.

The government has decided to continue its R100-million-a-month fuel price subsidy, but the Equalisation Fund is expected to dry up next month, which is likely to result a further 8c a litre increase.

"An increase of this magnitude will definitely lead to an increase in the prices of consumer goods," said Automobile Association (AA) spokesperson Petro Kruger.

Cape Chamber of Commerce head Albert Schuitmaker said although the transport component in prices of goods varied widely, it was very high for some.

"Transport providers are, to some extent at least, going to recover their extra costs from their customers," he said.

While Cape Town food prices were partially protected by the close proximity of the agricultural sector, most imported goods landed in Durban and were likely to increase in cost on their way down to Cape Town.

Cape Town taxi and bus operators said this week they would adopt a "wait and see attitude".

But Stephen Williams of the Cape Amalgamated Taxi Association (Cata) said: "I feel sorry for commuters, but if we don't increase the fare, we will go out of business."

Reggie Malimba of the Congress of Democratic Taxi Associations promised no fare changes in line with their "once every two years" pricing policy.

Generally, economists believe the substantial price increases will be temporary and expect decreases later this year.

The extent to which prices drop again hinges largely on the effect that Opec's increased production has on the crude oil price. If it falls below $20 (about R130) a barrel, the South Africa petrol price could be in line for cuts by up to 60c a litre - taking it back to roughly its mid-1999 price.

But any slip in the value of the rand against the dollar could send the petrol price in the opposite direction, even if the crude price does drop.

The AA has described the government's decision to increase the rail and road tariffs as "inopportune".

Barney Mostert, the AA's group managing director, appealed to the government to delay the implementation of the additional 5c/litre tax on fuel until oil prices had settled.

http://www.iol.co.za/news/newsview.php3?click_id=79&art_id=ct20000401203729131F420430&set_id=1

-- Martin Thompson (mthom1927@aol.com), April 02, 2000


Moderation questions? read the FAQ