Logistics Industry to be Hit by Massive Fuel Hike

Logistics Industry to be Hit by Massive Fuel Hike

With a massive fuel price hike coming into effect this November, the impact will be felt by the logistics industry and ultimately, consumers! While fuel generally fluctuates up and down by small margins, this time we can expect to see a significant increase. 

At a time when local businesses are just trying to recover from the impact of Covid-19 lockdowns and the civil unrest, this increase is unwelcome. 

The Increase

The current picture is showing the following: 

  • Petrol up by 99 cents a litre
  • Diesel and illuminating paraffin higher by R1.42 a litre 
  • 95 ULP inland will be pushed above R19/l (close to R19.30/l), and R17/l for diesel

If we take this increase into account, we can see that the price of a litre of fuel inland (95 ULP) will have increased from R14.86/l in January 2021 to R19.30/l in November 2021.This is a whopping 30% increase over 11 months! 

What’s Causing the Increase?

“The hikes in diesel and illuminating paraffin would be the largest in South African history, bearing in mind that this is only based on half a month’s data. R20 a litre for petrol is now a realistic scenario before the end of 2021,” explains the AA. 

Brent Crude prices have broken through the US$85-per-barrel mark and it is this basket of oil prices that are used to calculate our oil price here in South Africa. The high prices are not only generating concern in SA, but also in the USA, where President Biden has reportedly called on the Opec+ cartel to increase oil output in order to stabilise prices. So far, no response has been received and it does not look like it will be anytime soon. 

The struggling exchange rate is also playing a major role in the price of fuel. While the rand is still above its June level of below R13.50 to the dollar, it has not strengthened as much as needed. 

“The under-recovery to date this month has been vast, and the government will, in our view, have no option but to increase the Slate Levy to recover this deficit, making for a bigger hike,” says the AA.

“South Africans are paying at the pumps for weak governance, as one of the key indicators of the price of fuel depends on the exchange rate.”

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