CLEVER WAYS TO REDUCE COMMUTER COSTS

Prices always seem to be on the rise, and there is nothing that you can do to fight it except to save in areas where you may have been excessive in the past. We came across some smart and practical motoring tips that every road user should be aware of if they are keen to save on vehicle costs.

PETROL PRICE HIKE

Whatever goes up, must come down. And when the petrol price comes down, we can expect it to go up...

FUEL PRICE ADVICE

What goes up must come down… except for the fuel price!

A little over a week into the new month and all drivers are already feeling the weight of the escalating petrol and diesel prices.  Reaching record heights last week, petrol pumps are now set at over R14 per litre (R13.95 at the coast), and this excludes the increased fuel levies that will be imposed from April, as announced in the budget speech at the end of February.

FUEL PRICE TRACKER

ANOTHER HIKE WILL BE HEFTY ON THE POCKETS

Each month I have shared the latest news on the petrol price fluctuations. Some months I’ve had good news to share, some months… not. This month is not good news at all! This Wednesday, 3 July, will see the petrol meters ticking up another 84c per litre. The diesel pumps will be set to 78c higher per litre.

My Gauteng clients will now pay R13.23 for 95 petrol and R13.00 for 93; R12.19 for low-sulphur 0.005 diesel and R12.15 for standard 0.05 diesel. Capetonian and Durbs clients, you'll now fork out R12.86 for 95 petrol and R11.88 for low-sulphur diesel.

According to a report from IOL, international crude oil prices remained relatively stable during the most recent review period, so the main contributor to the increase is the weakness of the rand, according to the energy department.

ARE YOU TRACKING THE PETROL PRICE?

Fuel prices are adjusted on the first Wednesday of every month. This means that petrol stations are either swamped or empty on the Tuesday evening as motorists try to either fill up their tanks with the lower priced fuel or hang on until Wednesday morning to receive the new prices.

Each change in price will have an impact on your monthly budget - not only from the cost of fuel changes, but from the knock-on effect that it has on the prices of consumer goods!

Last month I shared an article on the petrol price decrease for May. In the article, I wrote the following:

“However, every few months we have been receiving a reprieve in the pump figures. As all the local news channels have been reporting, "Consumers are likely to breathe a sigh of relief, albeit temporarily, as the domestic petrol price is set to decrease next week."

Well, the petrol price did drop, and it will be dropping again on Wednesday, but this will most likely be undone in July.

As News24 wrote:

The retail price of petrol will decrease by 8 cents a litre next Wednesday (June 5, 2013), while diesel will fall by 3.98 cents a litre.

However, the government warned that this month's weakness in the rand - now down at four-year lows - would affect July prices.

"The department would like to take this opportunity to caution that the impact of the weaker currency will be felt in the July adjustment," the energy ministry said in a statement.

PETROL PRICE RELIEF IN MAY

Whilst there are many factors that influence the market, the petrol price is one major indicator of the way things are, and the order of things to come.  The weaker the rand, the higher the price: the higher the unit price (per litre) the more goods and services cost to collect and deliver, which means an increase cost of all products and services. 

However, every few months we have been receiving a reprieve in the pump figures.  As all the local news channels have been reporting, "Consumers are likely to breathe a sigh of relief, albeit temporarily, as the domestic petrol price is set to decrease next week."

 "The implication for the man on the street is that despite a temporary reprieve from a decline in fuel prices, a weaker rand compromises the spending power of the consumer."

The first Wednesday in May will be the first petrol price drop after three consecutive increases totalling around R1.30 for a litre of 95 (prices differ from the coast to inland).  In January this year, the price decreased by 15c a litre to R11.86, but has since risen to the region of R13.20/l.

DON'T FALL INTO A DEBT TRAP THIS YEAR

Prices are not escalating, they're rocketing.  A quick glance at my article on inflation over the past three years confirms this.  Escalating is a generously understated assessment of current economics.  What this means is that prudent financial planning is now even more necessary than ever before!

Analysts are warning South Africans against falling into the debt trap.

Automobile Association Spokesperson Gary Ronald has warned motorists that they can expect the fuel price to peak at about R13.50 to R14.00 per litre this year, with a chance of the pump price spiking to R15/l depending on politics and the US economy.  With many of us already sitting with tightened financial belts, this is of high concern.  The natural reaction is to increase our debt when things get too tight...

Fuel costs in early 2009 were, when at the lowest point, in the region of R5,70 per litre.  Three years on, we're paying more than double that.  If the above predictions are accurate, we'll be paying triple, in just three years.  This money either has to come from somewhere (we plan for it) or cut the expense (wiser spending).

PLANNING AHEAD

Whilst the media releases information that will hopefully illicit panic, I hope this information will incite planning!  The petrol price increase and the 8% increase in electricity means that our budgeting and financial plans need to be tailored to the new economic factors that effect our daily spending habits.

Our personal financial situations will only suffer if we don't engage with our portfolios and allow ourselves to be flexible with our goals.  It may mean that paying off your bond will take a few years extra, but if you're aware of it, you can make the necessary adjustments to your spending plans.