Petrol price increase disputed

The retailers have added their voice to concerns about possible manipulation of petroleum products prices. Lack of transparency in the fuel industry has led some retailers to believe that despite regulation, refiners might be in a position to manipulate the pump prices of petrol and diesel.

The department of minerals and energy on Friday announced that the retail price of petrol would at midnight tonight increase by 61c/l, the wholesale price of diesel and illuminating paraffin would, however, decrease, the department said.

Peter Noke, national director of the South African Petroleum Retailers' Association (Sapra) said yesterday, “I have received numerous inquiries from our members and from motorists who question why, at a time when the international price of oil is at a low, the cost of petrol is set to increase by such a significant margin — especially since the price of diesel will continue to reduce. It does not appear to make sense.”

Noke said the price of petrol and diesel in SA was based on an average of prices quoted by refineries in the Mediterranean, Singapore and the Gulf. Since mid December, those prices have been higher than those of Brent crude, he said. “The price of Brent crude is quoted extensively in the media every day — yet the country does not import Brent crude.

“In fact, the cost of Brent crude has no bearing at all on our basic fuel price — it is irrelevant. The fact that its price is quoted so often just confuses the issue,” he said.

Noke said international rates of supply and demand had significant influence on the cost of fuel. Traditionally, the price of diesel rises during periods of high demand, such as Europe's winter, since the fuel is used extensively for heating purposes. The price of diesel was decreasing, “indicating oversupply even though Europe's winter has been one of its coldest”.

Economist Tony Twine last week said the combination of rising petrol and falling diesel at this time was “unusual”. He attributed the unusual combination to an increase in the refining margins for petrol.

Source: Business Day

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