Only oil’s ongoing lower price is protecting South African motorists against the rampant Rand / US dollar exchange rate. This is according to the Automobile Association (AA) which was commenting on unaudited month-end data released by the Central Energy Fund (CEF).
“The average exchange rate used in the fuel price calculation has breezed past R16.40 to the dollar, approximately 25% lower than at the same time last year,” the AA commented.
“If the rate had held to its January 1 level, petrol would have dropped by up to 45 cents a litre a litre. Despite the saving from the oil price, the petrol price is set to increase by three to six cents.”
A similar picture is seen for diesel and illuminating paraffin, where oil price weakness would have seen a reduction of a Rand a litre with a flat exchange rate. However, the currency’s continued decline has pared the drop to a lower – albeit welcome – 64 cents a litre for these fuel types.
“As we have previously commented, the weak oil price means South African motorists have yet to be exposed to the full effect of the Rand’s slump,” the AA said. “If the oil price turns the corner without some recovery from the Rand, substantial fuel price increases are likely,” the Association concluded.