Motorists will experience one of the biggest fuel price drops in years. The Automobile Association (AA) has predicted a massive fuel price drop as from 1 April 2020. One of the main contributors to the price drop is the global oil price crash as a result of the Coronavirus pandemic.
The AA highlighted the ongoing crude oil price war between Saudi Arabia and Russia as well as a lower demand for oil amid the COVID-19 pandemic. The AA noted that even the downward spiraling of the rand against the US dollar will not be able to stop the drop in fuel prices.
“Not even the precipitous fall of the rand against the US dollar has been able to arrest the fuel price reductions, which are historic,” the AA stated.
Unleaded 95 petrol is set to drop by a whopping R2.18 per-litre drop, while 93 is set to drop by R2.05. Diesel is expected to drop by approximately R1.65, and illuminating paraffin by R1.98.
The fuel levy and the Road Accident Fund levy announced during the budget speech will kick in on the same day and will dampen the expected price reduction.
“In practice, all these drops will be slightly less, due to the 16-cent increase in the fuel levy, and nine-cent increase in the RAF levy,” the AA noted.
According to the AA, despite the addition of the 25 cents for the fuel levies, the expected decreases will bring the country’s fuel prices to levels last seen in late 2017 and early 2018.
While the fuel price drop is offering some relief to motorists it comes at a time when motorists’ driving is in anyway limited by the lockdown.
Logistics companies would definitely benefit from the price drop and should be able to pass on the savings to the consumers during the lockdown and economic hardships.