What determines the petrol price in SA?



Lawrance M, Durban

Posted: July 02 2012


Posted: July 02 2012

The Department of Energy's Hydrocarbons and Energy Planning Branch is responsible for coal, gas, liquid fuels, energy efficiency, renewable energy and energy planning, including the energy database. 

The liquid fuels industry was licensed in 2005 for the first time. The objectives of the licensing framework as detailed in the Petroleum Products Amendment Act 2003, Act 58 of 2003, include:

Promoting an efficient manufacturing, wholesaling and retailing petroleum industry

Facilitating an environment conducive to efficient and commercially justifiable investment

Promoting the advancement of historically disadvantaged individuals

Creating employment opportunities and small business in the petroleum sector

South Africa produced 23 571 million litres of liquid fuels product in 2005, according to SAPIA. About 36 percent of the demand is met by synthetic fuels (synfuels), which are produced locally, largely from coal and from natural gas. Products refined locally from imported crude oil meet the remaining 64%. 

The petrol price in South Africa is linked to the price of crude oil in international markets and is quoted in US dollars (US$) per barrel. International petrol prices are essentially driven by supply and demand for product in a particular market. 

Crude oil prices combined with the Rand/Dollar exchange rate therefore have a major impact on petrol prices. A crude-oil refinery's biggest input cost is crude oil. In order for a refinery to make a profit, the price for the product manufactured from crude oil has to be higher than that of the crude oil price. When crude oil prices increase - as they have over the past months - the petrol price has to increase so that crude oil refineries are able to cover their own costs.

Source: Department of Eneygy


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