Levies, Tax and the Fuel Price in South Africa

According to the Automobile Association (AA) the fuel price is the sum of four main components:

  • the basic fuel price
  • the general fuel levy
  • the Road Accident Fund (RAF) levy and
  • wholesale and retail margins, distribution and transport costs.

This article suggests that almost 70% of the fuel price in South Africa is due to taxes and levies.

I used data from {saffer} to examine this assertion.

Fuel Price Data 

Load the library.

library(saffer)
packageVersion("saffer")
[1] '0.1.5'

These are the two datasets that I’ll be using:

  • fuel_price and
  • fuel_price_basic.

Let’s take a quick look at their contents. The fuel_price data frame contains the effective fuel price (what you’d pay as a consumer), broken down by date, fuel type and region.

tail(fuel_price, 10)
# A tibble: 10 × 7
    year month   day date       region  fuel                  price
   <int> <chr> <dbl> <date>     <chr>   <fct>                 <dbl>
 1  2021 Sep       1 2021-09-01 inland  93 ULP                1815 
 2  2021 Sep       1 2021-09-01 inland  95 ULP                1834 
 3  2021 Sep       1 2021-09-01 coastal 93 ULP                1753 
 4  2021 Sep       1 2021-09-01 coastal 95 LRP                1762 
 5  2021 Sep       1 2021-09-01 coastal 95 ULP                1762 
 6  2021 Sep       1 2021-09-01 inland  Diesel 0.05%          1549.
 7  2021 Sep       1 2021-09-01 inland  Diesel 0.005%         1552.
 8  2021 Sep       1 2021-09-01 coastal Diesel 0.05%          1487.
 9  2021 Sep       1 2021-09-01 inland  Illuminating Paraffin  948.
10  2021 Sep       1 2021-09-01 coastal Illuminating Paraffin  867.

The fuel_price_basic data frame contains the basic fuel price, also broken down by date and fuel type.

tail(fuel_price_basic, 10)
# A tibble: 10 × 4
    year month fuel                  price
   <dbl> <fct> <fct>                 <dbl>
 1  2021 Aug   93 ULP                 819.
 2  2021 Aug   95 ULP                 828.
 3  2021 Aug   Diesel 0.05%           771.
 4  2021 Aug   Diesel 0.005%          773.
 5  2021 Aug   Illuminating Paraffin  750.
 6  2021 Sep   93 ULP                 808.
 7  2021 Sep   95 ULP                 817.
 8  2021 Sep   Diesel 0.05%           747.
 9  2021 Sep   Diesel 0.005%          750.
10  2021 Sep   Illuminating Paraffin  735.

I merged these two sets of data and then filtered out the records for inland 95 ULP since it has the longest history.

Plots 

Here’s how the price of 95 ULP has changed over recent decades, decomposed into contributions from the basic fuel price and other costs.

Although the basic fuel price has been fairly volatile, changing as a function of exchange rate and crude oil price, the other costs has increased systematically.

The plot below shows the relative contributions of these two components to the total cost of 95 ULP.

95 ULP was only available at the coast up until December 2005, after which it was only available inland. The figures above represent the price of 95 ULP under both regimes.

It looks like the basic fuel price has hovered at around 50% of the total fuel price. However, recently, the contribution from other costs is higher than that from the basic fuel price. In September 2021 the basic fuel price made up only 44.6 % of the total fuel price.

The figure below shows the distribution of the basic fuel price as a proportion of the total fuel price. The vertical dashed line is the average proportion.

Conclusion 

Historically the basic fuel price has contributed around 50% of the price of fuel. However, at present other costs are dominating the fuel price.