Siseko Njobeni
1 June 2009
Johannesburg — Economist Tony Twine says the recent strength of the rand has cushioned SA from the effects of a higher oil price.
THE Department of Energy has increased the incremental inland transport recovery levy on liquid fuels by between 1,5c/l and 3c/l. The increase in the levy, added to the price drivers pay at the pump, is the penalty consumers pay for insufficient pipeline capacity.
Transnet's pipeline from Durban to Gauteng - which petroleum companies with refineries in the coast use to transport petroleum products - is running at full capacity.
As a result, p etroleum companies have to resort to the expensive and inefficient road and rail transport of petroleum products.
The department says as much as 2- billion litres of petrol, diesel and jet fuel are transported by road and rail annually. This is expected to rise to 5- billion litres next year. The incremental inland transport recovery levy is a mechanism to finance the cost of transporting petrol, diesel and jet fuel to inland markets by road and rail.
Transnet is building a R12,7bn pipeline from Durban to Gauteng. The parastatal says the new pipeline will be operational by December 2011. Transnet recently suffered a setback when the National Energy Regulator of SA turned down its application for a pipeline tariff increase.
The company said its pipelines subsidiary required a significant revenue increase in order to cover costs and raise the necessary debt finance to build the new pipeline.
On Friday the department announced a 16c/l increase in the retail price of petrol. The wholesale price of diesel 0,05% sulphur will fall by 12,9c/l and the diesel 0,005% sulphur will decrease by 13,9c/l . The wholesale price of illuminating paraffin will come down 9c/l . The changes take effect on Wednesday.
The department said in the period between the end of April and Friday the average global prices of petrol, diesel and illuminating paraffin increased. In the same period, the average rand/ dollar exchange rate was R8,43, versus R9,15 in the previous period.
According to economists Tony Twine and Doret Els, the stronger rand cushioned consumers from the full effect of the rising oil price. In recent weeks, the oil price has shown signs of recovery after a free fall from last year's record levels. By Thursday, the oil price monthly gain was 28%.
Crude oil reached a record 147 a barrel in July last year before crashing to as low as 35 earlier this year. On Friday it was trading at 64,39.
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