With fuel prices expected to increase again, trade union federation Cosatu says the government should invest more in public transport and Transnet to cushion the poor from the rising cost of living.
This comes as the AA expected a slight increase petrol prices in April based on unaudited data from the Central Energy Fund (CEF). They added that the data also pointed to a marginal decrease to diesel prices and illuminating paraffin.
ULP95 petrol is expected to climb by around 10c/litre, and ULP93 by around 9c/litre. The wholesale price of diesel is expected to decrease by between 34c/litre and 38c/litre while the cost of illuminating paraffin is slated to come down by around 47c/ litre.
“The decrease in diesel and paraffin prices is certainly good news; diesel is a big input cost in major sectors such as agriculture, mining, manufacturing, and retailing, and an increase here often contributes to increased prices of basic commodities.
“If the rand/US dollar exchange rate, as well as the movement in international product prices, continues in its current downward trajectory, there is a likelihood that by the time the Department of Mineral Resources and Energy (DMRE) makes the official adjustment for next month, the under-recovery will be significantly less and result in a much-needed price decrease,” the AA said.
Cosatu’s Matthew Parks said the expected decrease in diesel and paraffin would provide welcome relief for workers and the economy, though this may be offset by the increase in petrol.
“While there is little government can do about the price of oil, it should reduce the fuel taxes, ensure all Metrorail lines are running, invest more in public transport and Transnet to cushion the poor from the rising cost of living.
“It is also important Eskom be assisted to reduce its dependency on double-digit tariff hikes and solar panels be rolled out across working-class communities.”
Bureau for Economic Research economist Tracey-Lee Solomon said international oil prices had risen amid indications of better-than-expected supply, and the extension of Organisation of the Petroleum Exporting Countries + (OPEC+) production cuts.
“So far the March average for the benchmark Brent Crude oil price is above the average recorded in February. Although oil prices are up, there is a divergence between the different oil product prices, namely petrol (gasoline) and diesel. “This is due to refinery output. At the start of the month (March), February trade data from China showed that the country had boosted diesel fuel exports and decreased gasoline exports. In addition, starting 1 March, Russia implemented a gasoline export ban.
“Finally, data from S&P Global showed higher diesel exports from the Middle East to Europe. These movements suggest that diesel supply in March is more robust than gasoline supply, hence the opposite movement in diesel and gasoline prices. The rand has also strengthened so far in March. This has contributed to a larger projected decrease in diesel prices and a less pronounced increase in petrol prices,” said Solomon.
On whether the trend in petrol and diesel prices would continue in the coming months, she said: “Differences in the changes of product prices can continue but that does not mean that they will diverge. One could increase or decrease at a faster rate as has been the case previously.
Russia’s gasoline export ban is set to remain in place for six months which could keep the gasoline market tight. Oil (refined to get gasoline and diesel) prices in general could remain higher for longer as demand proves to be robust and OPEC+ keeps production curbs in place.”
Cape Times