South African motorists have certainly felt the pinch of high fuel prices that continue to climb due to the weaker Rand and higher international fuel prices. Motorists are in for yet another fuel increase at the end of July based on the unaudited mid-month fuel price data released by the Central Energy Fund. According to the Automobile Association (AA), current data petrol will increase by 19 cents, 13 cents for diesel and 22 cents for illuminating paraffin.
However, the AA said, “if the prevailing rand and fuel price trends persist for the rest of July, the fuel price increase may be lower than expected, but we cannot rule out the possibility of further volatility.”
At the beginning of July, petrol increased by 26 cents a litre.
How are petrol prices calculated?
According to South African Petroleum Industry Association, the government regulates the petrol retail price. It’s changed every month on the first Wednesday of the month. The Central Energy Fund on behalf of the Department of Energy facilitates the calculation of the new price.
The petrol pump price is made up of a number of price elements and these can be divided into international and domestic elements.
There are two factors that influence the price of petrol, namely external and internal:
External factors: The exchange rate – that is the price of the dollar vs the rand.
Internal factors: These include rising prices in crude oil, transport costs, and taxes and levies.
How does the cost of fuel in South Africa compare with the rest of the world?
At the beginning of June 2018, the price of fuel rose to a record high, with petrol increasing by 82 cents and diesel by 85 cents.
When you examine how South Africa compares with 60 other countries around the world about the price of petrol, affordability and income spent on fuel, the results are both interesting and, eye opening…
How does the petrol price in South Africa, compare to the rest of the world?
The latest figures from globalpetrolprices.com show that the average price of fuel around the world is 1.17 US dollar per litre (R15.37).
According to Bloomberg data for the first quarter of 2018, South Africa ranks 20th alongside 60 other countries in terms of the price for 1 litre of petrol.
But one needs to consider that, as a general rule, richer countries have higher prices whereas the poorer countries (and those that produce oil) have significantly lower prices. The only exception is the US, which has an advanced economy, but low fuel prices. The difference in pricing is due to each country’s taxes and subsidies for fuel so basically, we all pay the same for fuel on the international market, but then decide to impose different taxes.
According to globalpetrolprices.com, the country with the cheapest petrol price is Venezuela, ranked first, with a petrol cost of 13 cents per litre. Iran is second with a petrol price of R3.94 per litre. On this list, which lists 167 countries, South Africa is sitting at number 90.
Hong Kong, an autonomous territory in south eastern China, is ranked second to last, with petrol costing them R27.86.
Iceland has the planet’s most expensive petrol at R28.12 per litre.
What is aggravating to know is that many other African countries are paying far less for fuel than we do. Countries like Algeria, Nigeria, Sudan and Egypt, all pay less than R6 per litre. Other countries like Mozambique, Botswana, Ethiopia, Tunisia and even Lesotho all get their fuel cheaper, too.
We are still looking better than places like Zimbabwe though who have to fork out R18.66 per litre or petrol and if you are in Mauritius, you are looking at R19.97.
Affordability
Unsurprisingly, South Africa ranks poorly in terms of affordability and ranks at 56. According to Bloomberg, South Africa has a daily income of R237.53 and consumers have to fork out 5.98% of that daily income to afford just 1 litre of fuel.
India is the worst in terms of affordability with an average daily income of R70.80 and consumers spend 20.11% of that income to pay for 1 litre of petrol. Venezuela ranks first for affordability. With an average daily income of R613.83, Venezuelans spend less than 0.01% worth of wages to buy 1 litre of petrol.
Income spent
Yet again, and unsurprisingly, South Africa ranks even worse in terms of total income spent on fuel with a poor ranking of 60. According to Bloomberg, the average motorist in South Africa uses 202.07 litres of petrol a year, which swallows up at least 3.31% of your average salary.
Mexico is the only country that is worse off. The average motorist in Mexico uses 355.48 litres of petrol per year, accounting for 3.82% of the average annual income.
Venezuela ranks first with motorists there using 483.76 litres of fuel per year yet only spending 0.00% of their salaries to pay for petrol.
For the full list of petrol prices, visit Bloomberg’s interactive graphic here.