It was announced in the National Budget speech on 26 February 2014 that on 02 April 2014 the general fuel levy will increase by 12c/litre, and the Road Accident Fund (RAF) levy by 8c/litre, thus 20c/litre. On the day a further fuel increase could also be introduced, depending on the strength of the rand and the Brent crude oil price. (You will recall that increases, and in the odd instances, decreases are announced on the first Wednesday of the month.)
The Department of Energy released a media statement on 28 February 2014 of the fuel price increases to be effected on 05 March 2014. If you have never invested the time to understand what economic variables are used and how these are applied to determine the fuel prices, you may want to take the time. The media statement follows:
The retail prices of all grades of petrol, the single maximum retail price (SMNRP) for paraffin, and the maximum retail prices of LPGas will increase with effect from Wednesday, 05 March 2014. The increase is due to movements in the crude oil prices, international petroleum products prices, rand/US dollar exchange rate during the current fuel price review (31 January 2014 to 27 February 2014) and the self-adjusting Slate levy which are briefly explained below:
1. Crude oil prices: The Brent crude oil prices increased slightly on average from 107.0 to
108.85 USD/barrel, during the current fuel price review period. The increase in the oil prices can be attributed to the bitterly cold weather in the United States during January and February which leads to the increase in demand for space heating fuels, disrupted crude oil and natural gas production as well as refinery, rail and pipeline operations.
2. International petroleum products prices The international petroleum products prices increased on average compared to the previous pricing review period. The increase in the product prices was mainly due to strong demand for petrol, particularly in US spot markets, which has opened the possibility for European supplies to supply the US and thereby increase the prices due to additional demand from the US.
3. Rand/US dollar exchange rate: The average rand/US dollar exchange rate has depreciated from R10.67/USD to R11.02/USD during the current fuel price review period and contributed to the fuel price increase by about 17 cents a litre. One of the reasons for the depreciation of the rand against the dollar was the disappointing Chinese manufacturing data which reinforced concerns of a slowdown in the world's second biggest economy which is one of South Africa's biggest trading partners.
4. Self-adjusting Slate Levy Mechanism Rules: In line with the Self-Adjusting Slate Levy Mechanism Rules, the Slate Levy on petrol and diesel will increase by 2.2 c/l from 13.16 c/l to 15.36 c/l effective from 05 March 2014.
5. Fuel Price Changes: The fuel price increases to be effected on 05 March 2014 are as follows: Petrol (all grades): 36.0 cl increase; Diesel (0.05% Sulphur): 27.2 c/l increase; Diesel (0.005% Sulphur): 28.2 c/l increase; IP wholesale: 16.0 c/l increase; SMNRP for IP: 22.0 c/l increase; and
Maximum LPGas Retail Price: 58.0 c/kg increase.