South Africa Fuel Price Increase 2022 – How Debt Review Can Help
We always aim for information we share with you at Sandton Debt Counselling to be as accurate and correct as possible. We do research, we vet information to the best of our ability before publishing – but sometimes, getting to the crux of the matter isn’t as easy.
This does not mean that we should not inform our clients, or potential clients, on matters that could possibly have a severe negative impact on their finances. There is that age old saying ‘rather safe than sorry’, and we all know what they say about hindsight… Then there is the one that says, ‘where there’s smoke, there’s fire’.
R40 for a Litre of Petrol – Fear Mongering, Conspiracy or Truth?
One thing we need to always bear in mind is that we shouldn’t believe everything that is shared via social media platforms. We have many clients contacting us in a panic after receiving fear inducing WhatsApps, or seeing posts on Facebook, as an example.
We have become skilled at guiding our debt review clients through these scares – as we generally already have the knowledge on whether the information received is factual, or not. Yes, we keep tabs on all things that could affect our clients financially.
Of late, there has been a sincere concern surrounding the possible cost of fuel in South Africa soaring to R40 per litre. This stems from an interview which allegedly aired on eNCA – with the claims regurgitated on other major SA news sites, like News24. A WhatsApp voice note pertaining to the R40 petrol price increase was doing rounds, which caused a major uproar as South Africans are already dealing with steep electricity hikes.
The claim was later debunked by the Automobile Association (AA) and economists, labeling the claim a ‘hoax’ – and the nation shared a collective sigh of relief. Was that sigh a bit presumptuous?
A Breakdown of the Cost of Fuel
To better understand how our fuel price increases work, one needs to look at a breakdown of what the total cost comprises. You are not simply paying for fuel, but instead, there are the added exorbitant taxes and levies that beef up the prices. Let’s look at the fundamental composition of the fuel price:
- Basic fuel price: approx. 48%
- Taxes and levies: approx. 33%
- Retail and wholesale margins: approx. 14%
- Storage and distribution costs: approx. 6%
This includes the Road Accident Fund (RAF) levy, the State levy, customs and excise duties, handling and delivery costs – and a whole lot more. There is also the ‘zone differential’ – yep, fuel costs more, or less, depending on where live, and whether you use diesel or petrol to fuel your vehicle.
June 2022 Fuel Price Increase – What We Know
It is common practice for fuel price increases to be implemented on the first Wednesday of a new calendar month. It is also common practice for the fuel price to be announced ahead of implementation. As things stand, we’re yet to receive a concrete announcement – and as people tend to do, there is a lot of speculation.
Without an official government announcement, we, at Sandton Debt Counselling, cannot effectively guide our debt review clients on the expected increase. South Africans were granted a temporary reprieve of R1.50 when the general fuel levy per litre was reduced from 6 April to 31 May 2022. The next increase might very well mean that the levy will be reinstated.
If the levy is reinstated, we might see a fuel price increase in the region of R4 per litre, which will kick in at midnight on Tuesday, 1 June 2022. Again, this is speculative as we’re yet to receive an official announcement. What we do know is that that the hole burning through South Africans wallets is about to get even bigger.
How Does a Fuel Price Increase Affect Debt Review & Consumers in General?
In conjunction with the increase in cost of petrol and diesel, a fuel increase ups the price of illuminating paraffin, but it doesn’t end there. The trickle-down effect reaches far and wide, affecting interest rates, the cost of electricity, public transport, the general transport industry – which has a knock-off effect on the price of consumer goods, including food – and the list goes on.
Debt review clients at Sandton Debt Counselling have a strict budget that affords them the opportunity to ease the monetary burden, whilst still being able to meet financial demands. As a debt review client, a fuel price increase of such magnitude might require a budget revision.
If you are not a debt review client but you’re feeling the guaranteed pinch, reaching out to Sandton Debt Counselling can provide you with much needed relief. Our expert team is here to guide you through a potential nationwide financial disaster, whilst offering a safety net simultaneously.
What is Causing Our Major Fuel Price Hikes?
At this point in time, fuel prices have skyrocketed as a result of the Russian-Ukraine war, which has had a direct impact on the global cost of crude oil. Three months into the war, and there is no real end in sight. Even if that situation was to stabilise, we need to look back on historical moments such as “Day Zero”.
When South Africa was in the grips of a record drought, we faced the very real possibility of running out of water. The government responded by implementing a water levy, scrapping our free basic water allowance – and increasing the cost of water at the same time. A few years later, our dams are full, and Day Zero is nearly all but a horrible distant memory. Yet, the costs and actions implemented at the time remain.
Is There a Real Possibility of Paying R40 Per Litre for Fuel?
At Sandton Debt Counselling we prefer to advise our debt review clients, and potential clients, based on facts. Right now, there is no factual evidence that can confidently predict where our fuel price might peak. If the Russian-Ukraine war continues, we may very well see a continuous steep upward trajectory of the fuel price in 2022, and beyond. Whether it will ultimately result in R40 per litre of petrol is anyone’s guess – and whether the cost will eventually decrease… well, that is hopeful.
What we do recommend is that you prepare for the worst and hope for the best. We are not suggesting that you live in fear, but rather that you take a proactive approach. If you are scraping by with the current cost of living, the reality is that we’ll all need to tighten our belts even more, very soon.
Reaching out to Sandton Debt Counselling and applying for debt review before you reach total financial ruin is a way to potentially protect your and your family from what is to come. Fill in our online contact form and one of our skilled team members will be in touch within 2 business hours.