Upon the interpretation of the mid-month fuel price data released by the Central Energy Fund, the Automobile Association (AA) predicts a decrease in petrol of about 32 cents a litre, diesel users are set to get a 17 cents decrease, while illuminating paraffin is expected to drop by 20 cents.
These decreases can be attributed to a number of factors, with the continued strengthening of the rand being the main contributor. Since last December, the rand has shown strong gains and South African consumers are beginning to enjoy the benefits of a stronger rand.
“There has been an average over-recovery on both petrol and diesel prices in the first half of January 2018. Further price drops will be dependent on movements in the international oil price, and the rand-dollar exchange rates while the February 2018 Budget Speech is likely to be the most influential factor impacting petrol price movements in the weeks ahead,” says Absa head of vehicle and asset finance, Nelisiwe Baloyi.
“This will be positive for the short-term inflation outlook as well as for interest rates eventually. Such developments will further support the financial position of consumers and businesses and contribute to improved economic conditions and levels of confidence.”
The resurgence of the rand has allowed motorists to breathe a sigh of relief, enabling them to have a little extra cash in their pockets. “It is important however for consumers to use any spare cash in a savvy way,” cautions Nelisiwe.
The decreases in pump prices have however been capped by the increase in global oil prices. Oil prices averaged $64 per barrel in December 2017, which was the highest average per month since 2014. The increase in the oil price has been mainly due to OPEC (Organisation of the Petroleum Exporting Countries) reducing production and a higher than expected global demand for oil.
Another factor that may affect consumers and their vehicles is an expected hike in the fuel levy when finance minister Malusi Gigaba delivers his Budget Speech on 21 February. Consumers should keep this in mind as this could curb gains made by the February petrol price decrease.
The Energy Department has confirmed that the petrol price will drop by 30 cents per litre, while diesel will be 17 cents cheaper per litre.
Illuminating paraffin is down by 19 cents, while LP gas will trade at 23 cents less per kilogram. These prices are effective as of Wednesday, 7 February 2018.