While Wednesday’s petrol price drop will bring welcome relief to motorists, it will only be a temporary respite, warns Efficient Group economist Dawie Roodt.
Roodt said this tanking in the fuel price is entirely due to the massive slowdown in China as a result of the Covid-19 coronavirus outbreak.
“The moment the virus epidemic is back under control and the Chinese economy springs back into action, the price of crude oil will spike and we will see massive fuel price hikes in South Africa,” Roodt said.
“While it is difficult to predict exactly what the coronavirus will do, it is beginning to look as if it is slowing down. This means that we could be seeing increases as early as March or April.”
He warned that the increase in consumption later in the year coupled with the 25 cents a litre fuel levy imposed by finance minister Tito Mboweni could see fuel prices skyrocket to new highs not yet seen before.
Finance minister Tito Mboweni also announced an increase in fuel levies for South African motorists during his Budget 2020 speech.
The minister said that the general fuel levy will be increased by 16 cents a litre for petrol and diesel.
The Road Accident Fund (RAF) levy will also increase by 9 cents a litre for petrol and diesel on 1 April 2020.
Motorists will pay 19 cents per litre less at the pumps when filling up with petrol, while diesel will see prices drop by as much as 54 cents per litre from Wednesday (4 March).
The price drops are attributable to the lower cost of international petroleum products, which were significantly impacted by oil price weakness on the back of a global market downturn due to the coronavirus outbreak.
International product prices for petrol, diesel and illuminating paraffin all decreased during the period under review.