See-Saw Rand, AA Warns Of Month-End Fuel Hikes

Based on the recent rand exchange rate and commodities data, the Automobile Association (AA) warns that fuel prices are set to increase at the month-end.

“We have noted oil prices spiking above $75 a barrel in recent days, and the upward trend has been evident throughout September,” says the AA.

“Brent Crude, in particular, has increased by $10 a barrel in less than a month, and the Mediterranean and Singapore prices used in South African fuel pricing are also on the advance.

“This trend could point towards substantial future fuel price increases.”

The rand/US dollar exchange rate was flat for much of the first half of September, with movements in a fairly limited range.

However, recent weakening, combined with higher international petroleum prices, could push fuel prices into negative territory by month-end.

“Until the government manages domestic policy more effectively, the rand will continue to expose South Africans to the full brunt of bullish oil prices, meaning South Africans are not getting fuel as cheaply as they could be,” says the AA.

The AA said it was unable to provide a more detailed outlook for the price movements of fuel for October beyond fluctuations because the Department of Mineral Resources and Energy (DMRE) was withholding the daily fuel updates.

Until recently the DMRE used to publish daily fuel updates on the website of the Central Energy Fund, and through emails.

“The DMRE has indicated that going forward it will only publish this update at the end of the month at which time the Association will be better placed to comment further,” says the AA.