South Africans can afford to buy 865 litres of fuel a month based on the latest average wage figures of R20 622 (net) a month, and the fuel price in this country is the highest in Africa.
Even with reductions in the massive fuel levies imposed by the government, the price of petrol in South Africa rose by 19,6% between January and June. Analysts at Picodi.com examined the dynamics of petrol price change in Africa and around the world in the first quarter of 2022 to calculate how many litres of petrol one can afford for an average wage in South Africa.
In June, the average price of a litre of petrol in South Africa was R23,85. A price increase is also felt by car owners in Tunisia (+11,2%), Zambia (+17,0%) and Kenya (+18,2%).
In Algeria, petrol prices were stable throughout the first six months. In Egypt and Nigeria, the price increased only by a small margin – 5,4% and 3,4%, respectively.
The Minister of Mineral Resources and Energy, Gwede Mantashe, announced the adjustment of fuel prices based on June 2022, said: “South Africa’s fuel prices are adjusted monthly, informed by international and local factors. International factors include the fact South Africa imports both crude oil and finished products at a price set at the international level, including importation costs, e.g., shipping costs.”
Recently, the director of fuel pricing mechanism at the Department of Energy, Robert Maake, said the government was working on several regulatory changes to address South Africa’s high petrol price and these included the possible introduction of a price cap, a proposal to stop publishing guidance on diesel prices and a process to review the Regulatory Accounting System (RAS).
In March 2022, there was a reduction in the Basic Fuel Price of 3c a litre and the removal of 10c a litre Demand Side Management Levy (DSML) on 95 unleaded petrol sold inland.
The Automobile Association (AA) warned that fuel price adjustments will hit already financially stretched consumers hard and put extra pressure on an already struggling economy. Adding short-term relief, while welcome, is not sustainable.
“We understand the government has no control over international petroleum prices and the Rand/US dollar exchange rate, which is why we have called and will continue to press for a review of the fuel price, an area where the government has control over the fuel price."
“There is a need to interrogate all the components of the fuel price, to determine whether all these components are still necessary for the existing formula, and to establish if the current calculations of these components are correct. The longer this review is not initiated, the longer the country will wait for lasting solutions.”
The Democratic Alliance has submitted its Fuel Price Deregulation Bill to parliament for processing. It aims to amend the existing Petroleum Products Act, which gives the government the power to prescribe the price of petroleum products.
The primary objective of the Bill is to deregulate the fuel sector to increase competition in fuel price-setting at both wholesale and retail levels, thus resulting to lower petrol prices for consumers, as retailers compete to win customers based on price levels.
In South Africa, after conversion to dollars, the petrol price is the highest in Africa – 1st place out of 7 accounted for countries at $1,51/litre. Other countries with the highest petrol prices are Zambia and Kenya, at $1,45/litre and $1,33/litre, respectively. Algeria and Egypt ($0,52/litre) enjoy the lowest fuel prices on the continent.
With the average wage, drivers from South Africa (865 litres), Algeria (764 litres) and Egypt (437 litres) can buy the most petrol.
According to the newest data presented by Stats SA, the average wage in South Africa is R23,982.00 gross monthly (R20,622.10 net monthly). Compared to the previous year’s petrol index, the purchasing power of the average South African wage dwindled significantly.
Here is what the petrol index in South Africa looked like in the last few years:
- 2019 – 1,215 litres
- 2020 – 1,345 litres
- 2021 – 1,237 litres
- 2022 – 865 litres
Substantial raw material resources saved some countries from the increase in the price of petrol.
Countries such as Saudi Arabia, Kuwait and Qatar were not affected by the world’s economic situation. The governments of countries such as Columbia, Ecuador and Kazakhstan have decided to either freeze or set the upper limit on petrol prices.
In June of 2022, Algeria ($0,31/litre), Kuwait ($0,34/litre) and Iran ($0,35/litre) recorded the lowest petrol price. Hong Kong, in contrast, stands out as the country with the highest price per litre ($3,00/litre).
In the global ranking of purchasing power, the podium still belongs to the Gulf countries: Qatar (5 968 litres), Kuwait (5 578 litres) and Saudi Arabia (4 372 litres).
The poorest country in this comparison is Cuba, where the average wage equals only 27 litres of petrol.
According to Picodi: “Petrol Index is an annual ranking of the relation between petrol prices and salaries conducted by Picodi since 2019.
“This study uses the newest average wage data published online by national statistics offices or relevant ministries. In countries where such data is not published, we used statistics from Numbeo.
“The average petrol prices in 102 countries in the first half of 2022 were taken from GlobalPetrolPrices.com and other local sources. The difference between prices in June and January was calculated in local currencies. To get the number of litres, we divided the average net wage (obtained through local wage calculators) by an average price of 1 litre of petrol. For currency conversion, we used the average exchange rate data from Google Finance for June 2022.”