The transport industry needs to brace itself for a dramatic increase in the price of fuel in 2018 given stronger international oil prices, a weakening rand and more taxes. According to economist Mike Schüssler, an increase in the fuel tax is inevitable considering the current fiscal pressures. “I estimate an increase of around R1.40 will be announced in the budget in an attempt to close the fiscal deficit. An addition of R1.40 to the petrol price will give Treasury around R28 billion,” he told FTW. Schüssler said increased taxes would in all probability hit the fuel price harder than the oil price. “The oil price remains volatile and trying to forecast it is extremely difficult. “I do, however, think we are going to see an increase in the oil price in 2018 but not as high as one might think.” Some oil speculators and traders have warned that the oil price could increase upwards to between $75 and $100 per barrel by March next year. Schüssler said he doubted this would happen. “I don’t foresee the oil price going higher than $80 per barrel and that would even be on the high side.” He told FTW he was forecasting it at somewhere between $55 and $70 per barrel. “If the oil price hovers around $60 per barrel and the rand weakens to around R15 to the dollar it will add about 5% to the diesel price and then of course the expected R1.40.” Diesel price forecasts currently range between R14 to R16 per litre by April next year. “I don’t think it will go as high as R16 per litre,” said Schüssler. “I think the price will more likely be around R14 to R15 per litre.” According to Schüssler transporters are advised to begin preparing for the fuel hike now.
My forecast is for the oil price to reach somewhere between $55 and $70 per barrel. – Mike Schüssler
