Because diesel is unregulated in South Africa the Department of Mineral Resources and Energy (DMRE) can only recommend a wholesale price. This is the figure that dropped to the lowest levels in four years this week. Namely, R18.41 (inland) and R17.58 (coastal) for diesel 0.05%. And R18.52 (inland) and R17.76 (coastal) for diesel 0.005%.
However, because diesel is unregulated in South Africa, the price you’ll pay is going to be far higher. This author refueled at a Shell service station this week (coastal) and paid just under R20 per litre for 0.005% diesel. So, where does the remaining R2.24 per litre go?
DIESEL IS UNREGULATED IN SOUTH AFRICA
Unlike petrol, the Department of Mineral Resources and Energy (DMRE) does not strictly regulate the price of diesel. Its prices serve merely as a benchmark and not a mandate for what service stations must charge. As such, this can catch some motorists off guard, especially if they refuel at the same filling station and don’t care to shop around.
As such, the DMRE publishes monthly wholesale list prices based on a Basic Fuel Price formula. This reflects international oil costs, shipping and distribution expenses. However, once diesel passes the wholesale level, retailers are free to set their price at the pumps how they wish …
WHY IS DIESEL ONLY PARTIALLY DEREGULATED?
Studies have found that diesel prices can vary by as much as R1 per litre in the same geographic area. Multiple factors are at play, like retailer margins, promotional strategies and operational costs. It’s totally within the station owner’s remit to price aggressively to attract volume. Or maintain higher prices in a prime location where volume isn’t an issue.
Plus, experts say this gap between wholesale and pump prices has only deepened in the last six years. Since COVID, South Africa has shifted from domestic refining to importing most of its diesel. Four of the country’s six refineries have shut since 2020, which brings new market dynamics to the business of importing.
UPSIDE TO DIESEL IS UNREGULATED IN SOUTH AFRICA
This begs the question, should diesel be fully regulated like petrol? Regulation would provide price certainty and eliminate potential price gouging in areas with limited competition. However, the counterargument is that deregulation typically allows more efficiency and competition. There are lower diesel prices out there for savvy consumers willing to hunt around.
Fortunately, technology is also on the side of the consumer trying to navigate the deregulated diesel market. It’s an app called MyTank. And it was developed by Cape Town entrepreneur Rob Gardner to address this exact challenge. He wanted to know where to find the cheapest diesel in his area. Available free on the Google Play Store, MyTank allows users to compare diesel prices at filling stations within their chosen radius. It even calculates the cost of driving to each location, to determine the best overall value.
LOYALTY SCHEMES RANKED
Better still, it also compares savings from various fuel rewards and loyalty schemes offered by banks/retailers. It’ll rank all the service stations nearest you, too. All you need to do is set your tank size, fuel type and rewards programmes to get personalised recommendations for where to fill up each week.
But what do you think? Do you notice the price of diesel vary wildly from station to station? And should the price of diesel be regulated beyond wholesale? Be sure to share your thoughts with our audience in the comments section below …
