South Africa: Fuel Prices at New Record Highs

UNCLAS PRETORIA 002665 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 Record Highs REF: PRETORIA 2998 Summary -------------- ¶1. (U) On July 6, 2005, the Department of Minerals and Energy increased the prices of gasoline, diesel, and kerosene to all-time highs. Two-thirds of the increase was due to a weaker rand and one-third to the higher international crude oil price. End Summary. Government Announces Substantial Price Increases -------------- --- ¶2. (U) On July 6, the Department of Minerals and Energy (DME) increased the retail price of gasoline in rand terms by 5.7% and wholesale prices of diesel and kerosene by an average of 10.5% and 8.9%, respectively. The primary contributors to the increases were the decline in the average rand/dollar exchange rate (from 6.28 to 6.77),which accounted for 67% of the increase, and the rise in the international price of crude oil, which accounted for 33% of the increase. The tables below show the increase in the average price of fuel in Johannesburg and components for the new price. While the change in the equivalent dollar price is small, the change in the rand price is large. Wholesale Johannesburg Prices (U.S. Dollars/Gallon) May June July %Change Gasoline - (retail) 3.20 3.05 2.99 -2.0 Diesel - 0.3% Sulfur 2.96 2.82 2.89 +2.5 Diesel - 0.05% Sulfur 3.10 2.95 3.02 +2.4 Kerosene 2.39 2.23 2.26 +1.3 Wholesale Johannesburg Prices (S.A. Rands/Liter) Gasoline - (retail) 5.22 5.06 5.35 + 5.7 Diesel - 0.3% Sulfur 4.84 4.68 5.17 +10.5 Diesel - 0.05% Sulfur 5.06 4.89 5.40 +10.4 Kerosene 3.90 3.71 4.04 + 8.9 Cost Components of the New Price Basic Fuel Cost 51.1% Taxes and Levies 30.2% Operating Costs and Dealer Margins 18.7% FRAZER