One month petrol drops and motorists breathe a little easier. The next month it climbs again. Diesel can rise even faster – or sometimes move in a completely different direction.
One month petrol drops and motorists breathe a little easier. The next month it climbs again. Diesel can rise even faster – or sometimes move in a completely different direction.
If South Africa's changing fuel prices sometimes leave you wondering who's moving the numbers at the pump, you're not alone.
The short answer is that our petrol and diesel prices are affected by a combination of international fuel prices, the rand/US dollar exchange rate and local costs, taxes and levies. Because these factors keep changing, the amount South Africans pay for fuel changes too.
Here's what is happening behind the numbers on the fuel pump.
South Africa adjusts regulated petrol prices on the first Wednesday of each month.
However, the calculations behind that adjustment don't happen only once a month. The Central Energy Fund (CEF) calculates petroleum product price indicators daily on behalf of the Department of Mineral and Petroleum Resources (DMPR).
The monthly adjustment reflects changes during the preceding fuel-price review period. This is why a change in the oil price or rand today doesn't necessarily appear at your local petrol station tomorrow.
According to the Department of Mineral and Petroleum Resources, two of the biggest external influences are international petroleum product prices and the rand/US dollar exchange rate.
At the heart of South Africa's fuel-price calculation is something called the Basic Fuel Price, or BFP.
Think of the BFP as an estimate of what it would cost to import refined fuel into South Africa.
It takes international petroleum product prices and import-related costs into account. Because international fuel is priced in US dollars, the exchange rate also matters.
The pump price then includes domestic components such as taxes and levies, transport costs, margins and other regulated charges.
In simple terms:
International fuel costs + exchange rate + local costs, taxes and levies = much of the price motorists experience at the pump.
Fuel is traded internationally in US dollars.
That makes the rand/US dollar exchange rate particularly important for South African motorists.
When the rand weakens against the dollar, buying internationally priced petroleum products becomes more expensive in rand terms. That can place upward pressure on local fuel prices.
When the rand strengthens, the opposite can happen – although other factors can still offset the benefit.
So even when international petroleum prices aren't moving dramatically, a significant change in the exchange rate can affect South Africa's fuel-price calculation.
It's important, but it isn't the whole story.
Crude oil prices influence international petroleum markets, but South Africa's Basic Fuel Price is linked to prices for refined petroleum products rather than simply copying the Brent crude oil price.
Global supply and demand, refinery capacity, shipping costs and disruptions to international energy markets can therefore affect petrol and diesel differently.
That's one reason headlines saying “oil prices fell” don't automatically mean motorists will see the same-sized decrease at the pump.
Petrol and diesel come from crude oil, but they are different refined products with their own international supply-and-demand conditions.
Diesel is heavily used in freight, agriculture, mining, construction and industry around the world. A shortage of diesel, refinery disruptions or stronger international demand can therefore push international diesel prices higher even when petrol isn't experiencing exactly the same pressure.
This distinction has become especially relevant during periods of global fuel-market disruption.
It also explains something motorists often find confusing:
Petrol and diesel do not have to rise or fall by the same amount.
They can even move in different directions.
Because South Africa's monthly fuel adjustment looks at pricing over a review period rather than simply using the international price on adjustment day.
The DMPR's fuel-price structure explains that the calculations are performed daily and the monthly adjustment reflects the preceding period.
There can therefore be a lag between changes in international markets and what South Africans eventually see at the pump.
Think of it as a monthly report card rather than a live fuel-price ticker.
What you pay at the pump isn't only paying for the fuel itself.
South Africa's fuel-price structure contains several domestic components, including government taxes and levies, transport costs and industry margins.
These include the General Fuel Levy and Road Accident Fund Levy, among other components.
Because some components are determined locally while others depend on international markets, the final pump price is a combination of factors inside and outside South Africa's control.
You may have noticed that filling up inland can cost more than filling up at the coast.
Transport is one reason.
Fuel arriving at coastal locations still needs to be transported to inland markets. South Africa's fuel-price structure includes transport-related costs and geographical pricing zones.
This means where you fill up can affect the regulated petrol price you pay.
It's another reminder that there isn't one single cost sitting behind every litre of fuel.
The Department of Mineral and Petroleum Resources publishes South Africa's official fuel-price adjustments, while the Central Energy Fund calculates petroleum product price indicators on the Department's behalf.
Petrol and diesel are also treated differently.
The retail pump price of petrol is regulated. For diesel, the government publishes a wholesale list price, while the retail selling price is not regulated in the same way.
That is why motorists can sometimes see different diesel prices between filling stations.
You can check the latest official announcements and fuel-price documents through the Department of Mineral and Petroleum Resources.
There's no single switch controlling the amount you pay.
The biggest factors to watch are:
Some months these factors work in the same direction. Other months, one factor can partially cancel another out.
That's why predicting the final adjustment from one headline about the rand or oil price can be misleading.
You can't control international petroleum markets or the exchange rate, but you can control how efficiently you use fuel.
Keeping your tyres correctly inflated, servicing your vehicle at the recommended intervals, avoiding unnecessary weight and driving smoothly can all help you manage fuel consumption.
If you're looking for more ways to stretch your tank, read MiWay's guide on car maintenance tips to save money on rising petrol and diesel prices.
And when you're at the pump, always check the fuel type before filling up. Putting petrol into a diesel vehicle – or diesel into a petrol vehicle – can become an expensive mistake. Here's what to do if you fill your car with the wrong fuel.
Fuel is only one part of the cost of keeping a car on the road.
Servicing, tyres, repairs, finance and car insurance all form part of the bigger monthly motoring budget.
So when petrol or diesel prices change, it can be a useful reminder to look at your overall vehicle costs rather than focusing only on what you're paying at the pump.
You can also review your car insurance from time to time to make sure the cover still suits your vehicle, circumstances and budget.
Fuel prices may keep moving, but understanding what drives those changes makes the monthly announcement a lot less confusing.
Keep an eye on international fuel markets, the rand and official DMPR announcements – and focus on the things you can control, from how you drive to how well you maintain and protect your car.
Looking at your overall motoring budget? Get a Miway car insurance quote and choose cover that works for you and your car.
