Hefty petrol, diesel price increases announced for May, despite fuel levy cuts

Despite the National Treasury and the Department of Mineral and Petroleum Resources' (DMPR's) decision to extend the cut in the fuel levies for petrol and diesel for May, hefty increases of R3.27 a litre for petrol and R6.19 a litre for diesel will be implemented from May 6 as the ongoing conflict in the Middle East continues to impact on global oil prices and domestic fuel prices.

In a May 4 media release, the DMPR points out that the increases are the result of local and international factors, such as an increase in the average Brent crude oil price.

Owing to the ongoing US-Iran conflict, Treasury and the DMPR last week announced a further temporary reduction in the general fuel levy of R3 a litre to be implemented in the price structures of petrol and R3.93 a litre for diesel from May 6 to June 2.

For the month of June, the level of relief is expected to be halved to R1.50 a litre for petrol and R1.96 a litre for diesel, effective from June 3 to June 30.

As previously reported, this will increase the general fuel levy for petrol from R1.10 a litre to R2.60 a litre and increase the general fuel levy for diesel from R0 a litre to R1.97 a litre for June.

From July 1, the general fuel levy for petrol will return to R4.10 a litre and the general fuel levy for diesel to R3.93 a litre.

MOTORISTS REDUCE TRAVEL, FUEL PURCHASES As motorists brace for the expected fuel price increases, new data from Discovery Insure indicates that South Africans bought 35% less fuel in April than in March.

The analysis, based on telematics and fuel reward card swipes from over 200 000 clients, shows how motorists responded to the fuel price increase on April 1, which saw petrol climb by R3.06 a litre and diesel by as much as R7.51 a litre.

The analysis also showed that fuel transactions dropped by 28% over the same period.

At the same time, driving behaviour also shifted. Trips taken were down 10% and the total distance travelled dropped by 9%.

Even when removing the Easter weekend of April 3 to 6 from the data, trips and distance travelled were still down by 8%.

"The data shows a clear and immediate response to higher petrol prices, Discovery Insure points out.

"Even with the government's effort to soften the impact by temporarily cutting the fuel levy by R3, consumers are tightening their belts by driving less, combining trips and being more deliberate about when they use their cars," says Discovery Insure CEO Robert Attwell.

He explains that the change in behaviour followed a sharp spike in activity just before the price increase.

On March 30 and 31, he notes that daily fuel transactions doubled compared to the rest of the month, while total spend on fuel rose by 81%, as drivers filled up ahead of the increase.

"This highlights how quickly people react," says Attwell.

He adds that there was a strong push to fill up before the increase, driven by uncertainty, followed by a pullback as behaviour adjusted towards the end of the month.

"Fuel spend started to pick up slightly in the third week of April, showing that while people responded quickly to manage costs, they started to find a balance."

Despite the drop in use, Discovery Insure notes that fuel spend remains largely essential and non-discretionary.

That is according to the 'SpendTrend26' report, which combines data from Visa and Discovery Bank, and found that most fuel purchases are driven by daily routines such as commuting to work, school runs and errands – meaning they are driven more by necessity and timing than choice.

The report also showed that while fuel still accounts for the majority of transport costs, alternative options are steadily growing.

This suggests that higher fuel prices are leading to less driving and encouraging a shift towards more flexible ways to get around.

"What we are seeing is not just a reduction in driving as petrol prices increase, but an overall change in behaviour. People are beco...