Home South African Good news for consumers as fuel price expected to decrease in June

Good news for consumers as fuel price expected to decrease in June

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Experts believe that the predicted decrease for petrol will be around 60 cents a litre, while diesel is expected to decrease by around 74 cents a litre,

Motorists will heave a sigh of relief after economists and the AA predicted that a petrol and diesel price decrease is on the cards. Picture: Independent Newspapers Archive

MOTORISTS will heave a sigh of relief after economists and the AA predicted that a petrol and diesel price decrease is on the cards.

There had previously been four consecutive increases in the fuel price and experts believe that the predicted decrease for petrol will be around 60 cents a litre, while diesel is expected to decrease by around 74 cents a litre. They have attributed the decrease to lower oil prices and a stronger rand.

Layton Beard, spokesperson for the AA, said that significant decreases in fuel prices across the board are expected in June.

“Mid-month data from the Central Energy Fund (CEF) indicates that 95ULP is expected to drop by around 61c/l, and 93ULP by around 63c/l. The wholesale price of diesel is expected to decrease by around 74c/l and the price of illuminating paraffin by almost 69c/l.”

Beard added that the main drivers behind the decreases are a strengthening rand and lower international oil prices.

“Movements in international product prices decreased a lot at the beginning of the month, resulting in expected lower fuel prices. With these expected decreases, the price of 95 ULP will dip slightly to below the R25/l mark and the price of 93 ULP will cost R24.52/l. Fuel is still more expensive now than it was at the beginning of the year,” said Beard.

Waldo Krugell, an economics professor at North-West University, said he also expects a decrease in the fuel price.

“The monthly changes in the fuel price depend on the price of oil in dollars and the rand-dollar exchange rate.

Recently the oil price has been lower and the rand has been trading stronger against the dollar.”

Krugell added that he agrees with the prediction of the Central Energy Fund. “It is mainly due to a perceived decrease in the risks of further conflict in the Middle East. Of course, it is only mid-May and a lot can still happen with the oil price and the exchange rate, but as things stand, South Africans can expect some fuel price relief in June.”

Professor Irrshad Kaseeram, from the University of Zululand’s Economics Department, said the petrol price will decrease about 62 cents a litre while diesel will decrease about 75 cents due to lower oil price and favourable rand dollar exchange rate.

Advocate Lavan Gopaul, director of Merchant Afrika, said he feels the petrol price will decrease by 59-60 cents a litre.

“I also feel the AA is accurate, that the diesel price will decrease by 74 cents a litre. There are a number of factors that are influencing the fuel price. However, the good news is that the international price of Brent Crude oil is lower and that has played a part in the expected decrease.”

Gopaul added that it’s good news but it’s surprising that the rand is stronger against the US dollar.

“During election time we would expect the rand to be weaker because of the uncertainty of government and coalitions. However, we hope that the election is peaceful, as if there is political violence and concerns about the government, the rand will weaken and we can expect the fuel price to go up in July following next month’s decrease.”

Johann Els, Old Mutual Group chief economist, said the fuel price would fall significantly in June.

“The rand was sitting at R19.24 to the US dollar on April 24 and as of yesterday it was R18.21 to the dollar. At the same time, Brent Crude has dropped from $89 a barrel to $82 yesterday,” said Els.

The Mercury

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