Fuel price pinch? Smart ways to cut costs

South African households, already stretched by the soaring cost of living, are bracing for fresh pressure following the first fuel price hikes in five months, introduced on Wednesday, 2 July. The increases have sparked concern about a knock-on effect on the cost of transport, food, and everyday essentials.

Compared to 20 years ago, South Africans now pay more than four times as much at petrol pumps. The inland price of 93-octane petrol was R5.02/litre in April 2005, and now costs R21.79.

JustMoney.co.za, a platform that helps South Africans make good money choices, unpacks the latest fuel costs, explains factors influencing price fluctuations, and offers tips for handling increased fuel expenses.

What are current fuel costs in South Africa?

According to the Department of Mineral Resources and Energy:

• Petrol has risen by 52 cents (95 unleaded) and 55 cents (93 unleaded),

The cost of 93 octane is R21.79/litre inland, such as Gauteng, and R21/litre in coastal areas, such as Cape Town.

• Diesel has gone up by 82 cents (500ppm sulphur) and 84 cents (50ppm sulphur). The inland price of higher sulphur diesel is now R19.35/ litre and

The coastal cost is R18.52/litre.  

• Illuminating paraffin has risen by 67 cents. The cost is 16/litre inland and R12.14/litre in coastal areas.
• Gas has decreased by 57 cents/kg nationally, except in the Western Cape, where it has increased by R1.90/kg. The maximum retail price is 77/kg inland and R36.08/kg in the Western Cape.

What drives fuel prices?

South Africa imports both crude oil and finished fuel products, so our fuel prices are influenced by two major factors: the international price of oil, and the rand/US dollar exchange rate. Increases usually reflect global supply and demand, geopolitical tensions such as conflict in the Middle East, production cuts by oil-producing countries, and rand weakness or strength.

Government-determined domestic components of the retail price, such as levies, including the Road Accident Fund levy, wholesale and retail margins, storage and distribution costs, working costs, handling fees, and more, comprise a large part of the final price paid at the fuel pumps.

While less volatile than external factors, domestic costs have been a faster-growing component of retail pump prices, up by over 500% since 2008, and sometimes representing over 50% of the retail petrol price, according to Codera Analytics data scientist Jan-Hendrik Pretorius.

Who will the fuel price hike affect?

Fuel price increases affect everyone, not only vehicle owners, says Sarah Nicholson, JustMoney platform and customer experience manager.

“Higher fuel costs typically lead to more expensive transport, food, and everyday goods. When owners of taxis, buses, farm and delivery vehicles pay more for petrol or diesel, those extra costs are passed on to the public. Taxis and buses may raise fares, and food prices tend to increase within weeks of a major fuel hike.

“For example, diesel is the main fuel for freight transport, farming equipment, and generators. More expensive diesel directly affects the cost of producing and delivering essential goods. That means a loaf of bread, or fresh vegetables, could cost more, even if the buyer never puts fuel in a car.”

Fuel station owners often face shrinking margins too, as motorists adapt by driving less and planning trips more carefully, which reduces stations’ sales volumes.

Fuel-efficiency tips for motorists

Drivers can optimise fuel usage in the following ways:

• Drive carefully and maintain steady speeds.
• Avoid heavy acceleration or sudden braking.
• Inflate tyres to the correct pressure.
• Remove unnecessary weight from the vehicle.
• Avoid peak traffic times.
• Plan routes efficiently.
• Combine errands into one trip.

Tips for commuters using public transport

• Travel off-peak. Services such as the Gautrain and MyCiTi bus offer lower fares during off-peak hours.
• Buy monthly or weekly travel passes. If you use taxis, buses, or trains regularly, enquire about discounted multi-ride or monthly passes.
• Plan your routes to avoid transfers. Each transfer between modes of transport (e.g. taxi to bus) can add to your total cost. Where possible, use direct routes or walk short distances between stops instead of switching vehicles.
• Use transport apps. Apps can help you plan the shortest, cheapest routes and track schedules to avoid unnecessary delays or costly alternatives.
• Join or form a lift club. In areas with limited public transport, a carpool or lift club can be more cost-effective, especially for work or school commutes.

Tips for paraffin users

Illuminating paraffin is used for cooking, heating, and lighting, especially in homes not connected to the electricity grid, or where families cannot afford electricity.

The latest increase could mean less money for food, transport, school fees, and other essentials. Some households may resort to alternatives such as burning wood or using candles, increasing the risk of fire and indoor air pollution.

• Use paraffin efficiently. Maintain stoves and lamps and ensure strong seals.
• Investigate government or non-profit organisation energy support programmes. TheiShack Project is a social enterprise that provides off-grid solar electricity to residents of informal settlements while they wait for grid-electrification.
• Check eligibility and register for municipal rebates. Limited, free basic electricity is available for households in need, which may help reduce reliance on fuel sources such as paraffin.
• Join stokvels or community savings groups. Buy paraffin in bulk from reputable suppliers and store supplies safely, away from children and heat sources.

“Fuel prices are notoriously volatile,” concludes Nicholson. “Global factors such as war, natural disasters, and decisions by oil-producing countries quickly change the picture. Locally, the rand’s performance against the dollar remains key. South Africans should prepare for continued fluctuations and include rising fuel costs in their financial planning.”

JustMoney.co.za is a trusted voice within the personal finance sector, helping consumers make good money choices. The JustMoney platform offers personalised insights, numerous articles, and a range of financial solutions and tools, including a free credit score check. Register here. 

Sources:

Department of Mineral Resources and Energy

Codera Analytics

iFleet - calculating fuel costs