If you’ve filled up your tank recently, you might have winced at the total. Fuel prices in South Africa seem to go up and down all the time – but what’s really behind these changes?
What Affects the Fuel Price Exactly?
In this guide, we’ll break down what affects the petrol price in South Africa, how it’s calculated, and what it means for everyday drivers like you.
1. The Price of Crude Oil and the Exchange Rate
South Africa imports most of its petrol, which means we’re highly dependent on global oil prices. The price of crude oil is the starting point for what we eventually pay per litre of petrol. When crude oil becomes more expensive, the cost to refine and transport it increases, too.
Additionally, the exchange rate between the South African rand and the US dollar plays a major role. Since oil is traded globally in dollars, a weaker rand means it costs more to buy the same amount of fuel – and that cost is passed on to you at the petrol station.
2. The Basic Fuel Price (BFP)
The Basic Fuel Price (BFP) is a benchmark set by the Department of Energy. It represents the cost of importing, shipping, and refining petrol and diesel. This includes freight costs, insurance, storage, and port delays (known as demurrage).
The BFP serves as the foundation for the total price you pay at the pump.
3. Taxes, Levies, and Government Charges
Several government-imposed levies are added to every litre of petrol sold in South Africa. These include:
- General Fuel Levy: A tax collected by the National Treasury to fund public spending.
- Road Accident Fund (RAF) Levy: A mandatory contribution to compensate victims of road accidents.
- Customs and Excise Duties: Additional charges that apply to imported fuel.
These levies can account for over a third of the final petrol price.
4. Wholesale and Retail Margins
After government levies are added, the cost of getting fuel from depots to your local petrol station is factored in. Wholesalers and retailers each take a margin for their role in the supply chain.
- The wholesale margin covers storage, handling, and transport from refineries to service stations.
- The retail margin is what the petrol station earns per litre for selling the fuel. These margins are regulated by the national government.
5. Other Costs to Consider
Other factors can also influence the fuel price, such as:
- State Levy: Used to recover losses when the BFP is set too low in volatile markets.
- Demand and Supply Dynamics: Seasonal travel, global conflicts, and oil production limits can all shift pricing.
All these elements combine to determine what it will cost a South African to fill up their car.
How Fuel Prices Impact Your Wallet
Fuel forms a big part of transport and logistics costs, so rising prices affect more than just your tank. Increases in petrol and diesel prices often lead to higher costs for food, commuting, and even insurance premiums.
When the cost of transporting goods like groceries, clothing, and electronics goes up, businesses often pass those costs on to consumers. That means you may notice your monthly grocery bill creeping higher, even if you’re not driving more.
For workers who rely on public transport or travel long distances, higher fuel costs can also make commuting significantly more expensive.
How to Save With Car Insurance
Want to take control of your motoring expenses? Choosing affordable, reliable car insurance is one way to manage your monthly budget. There are various options available tailored to your driving needs, whether you’re looking for full cover or basic protection.
Skipping car insurance may seem like a way to save money upfront, but it can end up costing you far more in the long run. A single accident or stolen car could lead to expenses you simply can’t afford to cover out of pocket – especially when household budgets are already stretched by rising fuel and living costs.
Insurance gives you peace of mind that you’re financially protected when it matters most. Not sure what kind of cover you need? Learn about the different types of car insurance, or get started with a quick online quote.
Smart Driving Habits Can Also Help
Small changes in how you drive can make a noticeable difference in fuel usage. Avoid harsh braking and acceleration, keep your tyres properly inflated, and limit unnecessary idling.
Planning your routes, using lift clubs, and keeping your car well-maintained can also improve fuel efficiency. Good driving habits don’t just save you fuel – they also reduce wear and tear on your car, lowering long-term costs.
Stay Informed and Stay Ahead
Understanding what affects the petrol price in South Africa gives you the power to adapt. Whether it’s tweaking your driving habits, comparing fuel prices, or revisiting your car insurance, a little knowledge can go a long way in helping you stretch every rand.
Disclaimer:
This article aims to explain the factors influencing fuel price fluctuations in South Africa. However, it is not a complete list, and readers are encouraged to do their own independent research.
For financial advice, consult a certified financial advisor to ensure you select the appropriate financial services product.
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