Understanding fuel is more than just being aware of the next fuel increase. South Africans use and spend on fuel in an interesting and different way than the rest of the world.
Cycling to work, carpooling more often or working from home may be what South Africans need to do this year, with the ever-increasing fuel price. In 2018, South African motorists experienced fuel prices which saw it increase to the highest it's ever been, at R17.08.
We were lucky enough to get a slight decrease with 93 Octane unleaded fuel standing at R 13,79 as of 2 January 2019, but as we brace ourselves for an uncertain fuel price future this new year, we take a look at this process and how much other countries in the world pay to get around.
It’s difficult to keep up with the constant fluctuation of petrol prices and the process of determining the fuel price doesn’t make it any easier. Oil producing countries such as the U.S, Russia, Saudi Arabia and China have complete control of the supply, leaving countries like South Africa in less control. As we all know, the Rand/US Dollar exchange rate plays a big role in what we pay for petrol because all our oil is paid for in dollars.
Wholesale and retail profit margins are some other factors that do affect the fuel price but not to a large extent. The government applies the Fuel Levy and Road Accident Fund (RAF) levy are the taxes that affect the fuel prices and are usually set in the annual Budget. This year, the ministry of finance pushed the Fuel Levy up by 7% to R3.37 and the RAF levy had a whopping 18% increase making it R1.93.
According to Global Petrol Prices, the average price of gasoline around the world is $1.11 per litre, which is R15.47. Richer countries usually have higher prices whereas the poorer countries (and those that produce oil) have significantly lower prices. The only exception is the United States with its advanced and dominant economy with low fuel prices. The difference in pricing is due to each country’s taxes and subsidies for fuel.
Despite Venezuelan President Nicolas Maduro stating that his country's fuel price would be increased in line with world market prices, Venezuela is the country with the cheapest fuel in the world at R0.14. People in Hong Kong’s wallets are taking quite a hit at R29.07. Oil-rich countries like Saudi Arabia and Iran enjoy some of the lowest fuel prices at R7.69 and R4.13 respectively.
Despite South Africa having had increasing fuel prices, we’re still one of the cheaper fuel prices in the world. Without the taxes levied on fuel, South Africa would enjoy fuel prices similar to those of our neighbouring countries. Botswana and Lesotho receive fuel from South Africa but pay R 12.40 due to not having the tax levies that we do.
This is how South Africa’s petrol prices and fuel levy have increased the past 10 years, based on official figures released by the department of energy. South Africans consume 11,1-billion litres of petrol and 12,1-billion litres of diesel a year! According to Bloomberg, South Africans have a daily income of R237.53 and motorists spend 5.98% of that daily income to afford just one litre of fuel. Bloomberg says the country comes in at number 60 in terms of total income spent on fuel, with the average South African motorist spending 3.31% of the average salary on 202.07 litres of petrol a year.
With 11 million vehicles on the roads, that’s a lot of fuel used each year.