The petrol price may increase at the end of August as the rand weakens against the US dollar. This is according to recent unaudited mid-month fuel price data released by the Central Energy Fund (CEF).
Although the minor August fuel price increase gave motorists a reason to breathe a sigh of relief as the mid-month data suggested that fuel prices may decrease by approximately two cents, the unstable rand has caused yet another shift in prices.
The Automobile Association (AA) said On Wednesday that the cause of the rand’s instability and recent drop in the strength can be attributed to the emerging market chaos as a result of Turkey’s current economic difficulties.
“Until the crisis hit, the fuel price picture for August had been flat, with data predicting modest declines in all the fuel types at month-end, thanks to the reasonable stability in the Rand and international oil prices,” the AA said.
Turkey’s economic strife caused the rand to dip by nearly 9% against the US dollar two days after the crisis broke out.
According to AA, the petrol price is out of the hands of South Africa as it depends on “international factors”.
Turkey’s economy is laden with difficulties as it refuses tighter monetary policies, and is currently engaged in a political debacle with the United States as they are detaining a Turkish national in the US.
Negative market news for Istanbul spells a negative outcome for the rand’s strength and a possible increase for South Africans.
The AA urges motorists to not count on the current estimations for the petrol price as the situation is unpredictable.
“Motorists should not count on the moderate trend of the past six weeks continuing, and we advise you to economise where at all possible,” the AA said.
With five consecutive petrol increases recently, civil action groups and opposition parties are putting pressure on the government to provide price alleviation for fuel, diesel and paraffin.
Although government has attempted to find solutions, there has not yet been any immediate relief.
The Department of Energy failed to make an appearance before the Energy Portfolio Committee on Tuesday to address the current petrol price crisis.
This failure to appear has been interpreted as a failure in managing the situation.