SOUTH AFRICA: FUEL PRICES AT NEW HIGHS

UNCLAS SECTION 01 OF 02 PRETORIA 001932

SIPDIS

STATE PLEASE PASS USGS
USDOC FOR 4510/ITA/MAC/AME/OA/DIEMOND
DOE FOR Thomas Sperl

E.O. 12958: N/A
TAGS: EPET ENRG ECON EIND SF
SUBJECT: SOUTH AFRICA: FUEL PRICES AT NEW HIGHS

REF: PRETORIA 2998

Summary
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1. (U) On May 4, 2005, the Department of Minerals and Energy
again raised the price of gasoline, diesel, and kerosene. South
Africa gasoline prices continued their upward spiral above the R5
per liter mark. This follows the substantial increases imposed
in March (8-12%) and April (8-16%). This time around, the
weakening of the rand against the dollar contributed
substantially to the overall price increase. Despite the record
price, government has no plans to tap into its Fuel Equalization
Fund to smooth retail gasoline price increases. The impact of
higher fuel prices is beginning to show in the economy, through
an increase in the Producer Price Index and a surcharge levied on
airline tickets. End Summary.

Government Announces Further Fuel Price Increases
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2. (U) On May 4, the Department of Minerals and Energy (DME)
further increased the retail price for gasoline by 4% and
wholesale prices for diesel and kerosene by 2.1% and 7.2%,
respectively. Over the last three months prices have increased
on these products by 29%, 26%, and 40%, respectively. The table
below shows the increase in the average price of fuel in
Johannesburg. Because of the weakening of the rand, dollar
increases are less than rand increases.

Johannesburg Prices U.S. Dollars/Gallon

April May %Change
Gasoline - (retail) 3.14 3.20 1.9%
Diesel - 0.3% Sulfur (wholesale) 2.97 2.96