Diesel price will spike by year end

SIGNIFICANT INCREASES in the cost of diesel will
strike by year’s end, Mike Schussler of Regional Business Analysts told delegates at
last week’s Road Freight Association (RFA) convention in Swaziland. Apologising for conveying “such alarming talk and bad
news,” Schussler predicted diesel fuel at US $40 a barrel above the oil price by January.
“We’ve never seen diesel prices at this continuing high margin against oil prices. Oil
prices may decline, but this will not be reflected in diesel prices. In rand terms, we
will see diesel at least R12 a litre by the end of the year; maybe R14 and possibly R16
a litre,” Schussler said.
He forecast that an oil price drop might be in the short-term offing, but it
would not last or help diesel costs.
“The oil price may decline, but this will not be reflected in diesel prices. The diesel
price above oil is likely to be high for a long time to come. You may get some slight
relief in August, but by year’s
end we will see a significant rise,” he said.
Contributing to the price rise will be higher
worldwide demand for diesel, an expected cold northern winter, a proliferation of
diesel-fuelled electric power plants, and a lack of refining capacity worldwide that will
persist because of the length of time required to build such facilities.
Fuel costs per truck in SA have doubled since 2003, said Schussler, and the trend will
continue with a weakening rand at R8 to R8.10 to a dollar by year’s end.