Reasons why the petrol price has not fallen lower

2014-12-02 00:00

SOME people are wondering why there will only be a 69 cents/litre drop in ­petrol prices tomorrow, even though world oil prices have hit five-year lows.

United States crude oil prices fell more than three percent to a five-year low of $64,10 per barrel at one stage yesterday — the price has fallen more than 40% since June. But the local ­petrol price has only fallen 8,6% over a year and 11,3% since June.

World oil prices have slid because Opec (Organisation of Oil Producing Countries) say they won’t cut ­production, even though markets are oversupplied.

Economist Mike Schüssler of ­ said tomorrow’s ­petrol cut will put up to R300 extra into motorists’ pockets this month.

And there might be another petrol price cut in the new year.

One factor that has stopped local petrol prices from falling further is the weakening rand against the U.S. dollar — dollar-priced crude oil imports cost more in rand terms to buy when the rand weakens.

The rand yesterday tumbled to fresh three-week lows against the dollar after weaker exports widened the trade ­deficit.

It has fallen some 5,7% against the greenback over a year.

Another factor preventing the petrol price from falling further this month was an increase in petrol margins to 215,4 c/l from 198,9 c/l — these are ­increases in profit margins paid to the petroleum industry in this country.

This adjustment will increase the petrol price by 12,3 c/l tomorrow, after taking into account a 4,2 c/l salary ­adjustment for petrol attendants that was included in the petrol price in ­September 2014, according to the ­Department of Energy.

Diesel prices fall by 53,50 c/l ­tomorrow.

The petrol margins are adjusted on an annual basis in December.

This year, the margins are adjusted in accordance with the implemented Regulatory Accounting System as ­approved by the department last year.

The margins increased from 198,9 c/l in the previous year to 215,4 c/l this year.

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