Brace for petrol price shocker! Article By: Max Gebhardt Wed, 05 Jun 2013 10:41 AM Motorists can enjoy some relief after the retail price of petrol decreased by 8c/l and diesel by 3.9c/l on Tuesday night, but they need to brace themselves for a bigger shock at the end of the month. The under-recovery on 95 octane petrol is currently 86c/l, and 77c/l on diesel. Should this persist until June 28, when the Department of Energy makes its next adjustment, the increase will wipe out this month’s and last month’s reduction of 73c/l. It will also see the price of petrol above the R13/l mark, which was breached for the first time in April. The under-recovery is a result of the rand’s slide to four-year lows against the dollar last week over concerns about ongoing industrial unrest at the country’s platinum mines and weak growth prospects. He rand has since retracted some of its losses and was last trading at R9.75/$. Automobile Association public affairs director Gary Ronald said there are in effect three weeks to try to claw back the under-recovery. He said that for the petrol price to remain unchanged, the rand will need to regain about 50c against the dollar to about R9.20/$, if oil remains at $100/barrel. "The oil price has been quite stable for the last two months as the northern hemisphere goes into its summer period. It is likely it will stay in the $98 to $100 band for the next five to six weeks." Mr Ronald said that, at current levels, the price of petrol might go up by 90c as the department will need to implement a 10c slate levy to adjust for shortfalls in collections. RMB Global Markets economist Carmen Nel said the odds are stacked against the rand recovering to R9.20/$ in a month, but it was not out of contention in a longer period. Even though the petrol price is returning to its levels in April, Ms Nel said the higher price could feed into inflation expectations and will eventually cut discretionary spending. Absa Capital senior economist Peter Worthington said the petrol price hike is likely to add 0.38% to the consumer price index. "We are clearly going to be above the 6% band," he said
Posted on: Thu, 06 Jun 2013 19:39:10 +0000
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