In recent months, South Africans have felt the frustration of rising petrol and diesel prices that have made travel far more costly.
In this article, we’ll be taking a closer look at just why petrol is so expensive in the first place, and how you can budget effectively should petrol prices increase in the future.
What informs the petrol price?
In South Africa, the price of both petrol and diesel is informed by four key factors – the general fuel levy, the Road Accident Fund, the Basic Fuel Price, and wholesale and retail margins.
What is the general fuel levy?
The general fuel levy is a tax on top of every litre of petrol that is sold. The fuel levy itself is administered by the National Treasury.
What is the Road Accident Fund?
The Road Accident Fund (RAF) is a South African state insurer. This means that the RAF provides personal injury insurance to all drivers (except those that have been found to be negligent) in the event of an accident.
What is the Basic Fuel Price?
The Basic Fuel Price is the measurement of what it would cost a South African importer of petrol to purchase petrol from an international refiner, transport the petrol in, insure it against loss, and sell the product itself in South Africa.
What are wholesale and retail margins?
Put simply, wholesale margins refer to the price of petrol charged by refineries to produce and export petrol and make a profit, while retail margins instead refer to the costs charged by oil companies to sell petrol at retail (when you fill up at a petrol station). In South Africa, retail margins are calculated by the Department of Energy.
Where could the petrol price go to?
The cost of petrol can further be influenced by the price of crude oil, international politics, the exchange rate between the South African Rand (ZAR) and the United States Dollar (USD).
Several economists have predicted that the prices of both petrol and diesel may worsen soon, given the exchange rate between the Rand and the US Dollar and worldwide developments.
The South African Automobile Association (AA) offers petrol and diesel price predictions at the middle and end of every month to guide South African consumers as to what they can expect to pay the next time they need to fill up.
You can beat price increases by budgeting well; start by noting how much it would cost you for a full tank of petrol, and work to save that amount over and above your present monthly savings. If you need help, we’ve got an easy-to-use budget planner template to get things started, and our handy money saving tips can also lighten the load on your finances.
Checking your tyre pressure, driving smoothly, changing gears earlier rather than driving at high engine revs, and avoiding rush hour traffic can also reduce your reliance on petrol.
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