Fuel Prices over the past few years

As a country we hang our heads in defiance when hearing another announcement of a fuel price hike. Over the last ten years the price of petrol per litre has more than tripled. 

 

Let’s look at fuel prices over the past few years and also discuss some factors that contribute to the consistent rise of fuel prices.

 

 

The above image (sourced from www.cars.co.za) may be no news to you. In 2003 South Africans had to pay R4.00 for a litre of petrol.

 

This sound unrealistic in comparison to what consumers must pay now. On average, the petrol price gains nearly a rand a year, although the jumps in the prices have been erratic. Between 2003 and 2013 the petrol price was pushed up with a whopping 339%!

 

 

The year between August 2008 and August 2009 have seen a drop of nearly R2,50 per litre – a welcome reprieve for consumers in South Africa. But the last 4 years has seen the price nearly doubled.

 

This leads us to ask the question – why do fuel prices rise and fall constantly? What factors determine the cost of filling up my car? In the long term the biggest factor influencing fuel prices is the cost of crude oil. In the marketplace however, factors include forces of supply and demand and also competition.

 

Figures released in July of this year indicate that nearly 28% of fuel costs are attributed to taxes. This means that R3,69 of the R13,23 per litre goes to tax. Other factors that influence the fuel price are local market conditions such as supply, demand, competition and government regulations.

 

In the short term supply and demand imbalances will definitely affect prices. Supply shortages due to whatever reason (including transport and worker strikes) will typically cause an upward price pressure. Length of supply, where supply exceeds demand, can result in a downward price pressure.

 

Due to the fact that our oil is  mostly imported, foreign exchange and geographical location play an important role in determining the fuel price. Consumers who live in coastal areas will typically pay a lower price due to the fact that they bypass the costs of transporting fuel inland.

 

So what awaits fuel consumers in the future? Well, that’s difficult to determine with certainty. Some fuel suppliers are starting to implement a comprehensive national energy policy that addresses both fuel conservation (in other words, reducing demand) and increasing the supply of crude oil and refined products. This includes streamlined permitting for petroleum infrastructure as well as increasing domestic oil production in environmentally responsible manners.

 

Ultimately fuel prices are determined by global supply and demand and the market will always decide the price. Consumers who are finding the fuel hikes problematic, should look for alternatives such as public transport or carpooling. 

 

In the end fuel is a much needed commodity, regardless of the effect on its consumers’ pockets.

 

 

Writtem by Marleen Theunissen

Creative writer for ATKA SA