Home Opinion and Features Petrol price not coming down any time soon, says expert

Petrol price not coming down any time soon, says expert

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This as South Africans are feeling the pinch after a year of frequent fuel price increases with no reprieve in sight.

Picture: Karen Sandison, African News Agency (ANA)

CONSUMERS should not expect the price of fuel to come down any time soon, says Fred Razak, the chief trading strategist of CMTrading.

This as South Africans are feeling the pinch after a year of frequent fuel price increases with no reprieve in sight.

The latest data released by the Central Energy Fund on April 12 implied a significant petrol price hike was likely for May.

The current month-average data points to increases of 70 cents for 95 unleaded petrol and 77 cents for 93 unleaded, but with the latest daily numbers showing an under-recovery of between R1.13 and R1.21 it’s possible motorists could face an increase of more than R1 per litre if current trends persist.

Razak said people were too focused on the oil price as the determinant of the pump price.

Around the world the price being paid at the pump by the average consumer for a litre of petrol is going up. With the price of the raw ingredient in diesel and petrol, crude oil plummeting to a historically competitive $74 (R1,345) a barrel, consumers are noticing that the prices aren’t coming down and that oil companies are, at the same time, declaring record profits.

He said everything was getting increasingly more expensive from the labour used in the refining to the price of fuel in the distribution process. This was driving the current high prices.

And the price of the raw product did not immediately impact the price at the pump, said Razak.

Only 20% to 25% of the price at the pump was based on the actual oil price.

“Let’s assume you are paying R30 a litre at the pump, well that’s made up of several costs. The other 75% of the cost of that R30 is made up of taxes, the cost of refining the oil, and the cost of distributing and serving the petrol, and the rand dollar exchange rate,” he said.

Due to the long-term factors, and the relatively stable price being experienced at present, Razak said he did not expect any dramatic moves in terms of crude oil. However, he predicted that consumers may be paying even more at the pump for their fuel.

– BUSINESS REPORT

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