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'Fuel prices will continue to rise' - Freight & Trading Weekly - 19 March 2000 edition -
- Freight & Trading Weekly
19 March 2000 edition
'Fuel prices will continue to rise'
Alan PeatROCKETING FUEL prices are likely to have a drastic impact on SA's economic hopes for this year, and on international transport costs.
A result of OPEC (Organisation of Petroleum Exporting Countries) putting caps on output levels, fuel prices around the globe have boomed ever upward.
And local prices have followed suit.
In the past year, ship bunker costs have near trebled.
According to bunker prices released to FTW by Cockett Marine in Cape Town, the cost in Durban of fuel oil has increased by 203% in the March 1999 to March 2000 period. Diesel has jumped by 136%, and gas oil by 126%.
Said Cockett's bunker trader, Ian Graystone: "Prices are also likely to keep rising till the end of March - although possibly more slowly."
Graystone also hopes that the March-dated OPEC meeting will yield to the international political pressure being placed on the main oil producers. "They are likely to ease the restrictions," he said, "and I expect prices to then stabilise."
Jet kerosene, meantime, has more than doubled in the past year, according to Andrew Banks, senior petroleum manager for national carrier, SAA.
"In the current month (March) we are paying 10% more than last month," he told FTW. "This, and a slide in exchange rates in the past few days, makes us very concerned about our fuel budget." And this is a particularly large part of the overall operating cost of a jetliner, where fuel costs are rated at about 18%-26% of the total.
Road and rail operators are less hard hit up-to-now. The Gauteng wholesale price of diesel, according to Department of Mineral & Energy Affairs figures, has risen by 26% in the March 99-March 00 period. The province's pump price of petrol (leaded and unleaded), meantime, went up by 28%.
But the international indicator prices used to work out the landed cost of fuel in SA have continued to rise. This is expected to make the February-March audit period one of considerable "under-recovery", and all the fuel users talked to by FTW expect another big upward bump in early April.
Shipping lines have already introduced bunker surcharges, with airlines on the SA route also adding a fuel surcharge.
But these don't match the fuel price increases.
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