By Nico Strydom
In South Africa fuel prices are adjusted monthly according to a number of factors.
According to the Automobile Association (AA) the cost of a litre of petrol is determined by four main elements, namely the fuel levy, the Road Accident Fund levy, the basic fuel price and wholesale and retail margins, and distribution and transport costs.
The fuel levy is a tax levied on each litre of petrol sold. The money made in this way is administered by the National Treasury. According to the AA it is dealt with as a general tax and not used for road-related expenditure, as most people seem to think.
In April 2016 the fuel levy rose by R2,55 to R2,85. In 2017 the levy rose by 30c from R2,85 to R3,15. In April 2018 the levy again rose by 22c and now stands at R3,37 a litre.
The money collected by means of the Road Accident Fund levy is used for the Road Accident Fund to compensate the victims of car accidents. In 2016 this levy was R1,54 and in 2017 it rose by 9c to R1,63. In April 2018 the levy rose by 30c and now stands at R1,93 per litre.
In April 2018 the fuel levy and the Road Accident Fund levy accounted for R5,30 of the price of each litre of fuel sold in South Africa.
The basic fuel price is calculated on the basis of the cost of shipping petroleum products to South Africa from the Mediterranean area, the Arabian Gulf and Singapore. According to the AA insurance, storage and wharfage are also included. According to the Department of Energy the basic fuel price is quoted in American dollar per barrel and then converted to American dollar per litre. It is then converted to South African cent per litre by applying the current rand-dollar exchange rate.
Other costs include transport costs from harbours to other areas, customs and excise tax, the retail margins paid to filling station owners, and secondary storage costs.
The monthly price of fuel is adjusted according to a number of factors, mainly international oil prices and the rand-dollar exchange rate.
The price of fuel also differs between the coast and the interior. This is mainly due to the cost of transporting the fuel from storage facilities at the coast to inland storage facilities.
According to the AA the consequence of rising fuel prices is that goods transported across the country also become more expensive as companies try to recover the increases by passing it on to the consumer.
The Automobile Association: https://www.aa.co.za/insights/petrol-price-breakdown
Department of Energy: http://www.energy.gov.za/files/PPA-Campaigns/gauteng/Fuel-Price-in-South-Afrika-DoE.pdf