Nicolette Dirk, finance writer, Justmoney.co.za
Today motorists are adjusting to paying R13, 96 per litre for petrol, but economists have warned that this is not the last petrol price hike for 2014.
Much of the blame for the increase in petrol costs has been put on the Rand’s performance against the dollar. The Department of Energy stated that the average Rand/US Dollar exchange rate depreciated from R10.36 to the US Dollar to R10.67 to the US Dollar during the current fuel price review period (27 December 2013 to 30 January 2014).
Laura Campbell, Econometrix economist said she predicted that fuel could go up again by 20c a litre next month.
The Automobile Association (AA) has warned that if the Rand's depreciation continues unchecked, a price of R16 per litre at the pumps is possible in the medium term.
“The severity of the Rand's decline is reflected in the exchange rate numbers. On the 27th of December, a dollar cost R10.35. By the 27th of January, it cost R11.20. Meanwhile, international petroleum prices have ticked up slightly since our last review of fuel price trends in mid-January, so it's a double whammy for motorists,” said the AA.
Campbell said the Rand’s depreciating value accounted for 34c of the 39 c increase experienced this month. But she added that on a short-term basis, the effect the increase will have on petrol inflation is not significant because last year this time, the petrol price hike of a 41c/litre increase was more than what we see this year.
What can consumers do to lessen the blow?
Mark Cerff, financial consultant at DebtBusters, said the petrol increase will hit consumers especially hard because up to 10% of their salaries are dedicated to fuel.
One of the solutions he suggested was to start a lift club to lessen the financial burden of rising fuel costs.
“A lift club can cut your petrol cost by half. Public transport is also another way to save money on petrol,” said Cerff.
But Christelle Fourie, managing director of MUA insurance acceptances, warned that if consumers receive money for car-pooling, some insurance companies may consider this to be business use, which could cause problems if the policy states the car is only covered for personal use.
“With the petrol price reaching its highest level in the country ever at just under R14 per litre, many motorists may consider forming a car pooling group in an effort to reduce costs associated with daily travelling. However, they could be placing themselves at risk of a motor insurance claim rejection if they are not aware of the insurance considerations when it comes to car-pooling activities,” said Fourie.
She added that some policies stipulate consumers are not allowed to carry fare-paying passengers or use it for trade purposes, so it is vital that consumers check with their insurance providers to see whether they need to adapt their policy accordingly.
“Passengers in a car pool may contribute to the cost of running the vehicle but there must be no element of profit or monetary gain for the owner. If the driver does make a profit, then they are potentially invalidating their domestic motor insurance policy because anyone who stands to make a profit from any form of transportation with their vehicle, such as a shuttle service, must officially register as a taxi operator," said Fourie.