Fill your car — petrol’s going up by 30c next week

2009-06-25 00:00

MOTORISTS are beginning to feel that familiar sinking feeling associated with rising fuel prices.

The petrol price is set to rise by about 30 cents a litre next Wednesday — the fifth hike in only six months this year. The wholesale price of diesel is expected to increase by about 45 cents a litre.

Senior economist at Dynamic Wealth, Johan van Tonder, told The Witness that the changes are mainly a result of a recent spike in the oil price to around U.S.$72 per barrel.

The strengthening of the rand against the dollar during late May and early June softened the blow to motorists. However, the rand has weakened against the greenback recently.

Many economists and technical analysts believe that a global oil price of more than $70 per barrel is not sustainable for any significant period of time.

Van Tonder agrees, adding that an oil price of below $45 per barrel is also not sustainable, as oil producers still produce the commodity at $20 to $45 per barrel.

“It is not strange that producers cut back on production [at low oil prices]. But, then the market ran away with the recent good news that the U.S economy may recover from its recession by the end of this year and they expected economic growth to return next year and they priced this into the oil price. We should be cautious because consumer demand for oil is still down,” said Van Tonder.

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