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Petrol price to drop by 27 cents

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Petrol price to drop by 27 cents

by Janine du Plessis
03 Aug 2008
BuaNews Online
BuaNews Online

The price of petrol is to decrease by 27 cents per litre on Wednesday, the Department of Minerals and Energy said on Friday. Petrol will decrease by 27 cents per litre in retail price while diesel will decrease by 16 cents per litre in wholesale price.

Illuminating paraffin, however, will increase by 3.4 centres per litre in wholesale price.

The actual decreases in the pump prices of all grades of petrol, will differ "due to the rounding of pump prices to accommodate the dispensers that cannot display 4-digit number".

In Gauteng, the pump prices will decrease by 30.0 c/l, the department said.

The economic factors affecting the unit over or under-recoveries for the period between 27 June and 31 July include the average international product prices of petrol decreasing, while diesel and illuminating paraffin increased.

The average Rand/US Dollar exchange rate strengthened when compared to the previous period which also affected the prices.

"The average Rand/US Dollar exchange rate for the period 27 June 2008 to 31 July
2008 was 7.6814 compared to 7.9352 during the previous period," said the department.

Speaking to BuaNews recently, economic strategist from Econometrix Treasury Management (ETM), Russell Lamberti, said he expected a cut of about 25 to 30 cents for petrol, and about 15 cents cut in the price of diesel.

Mr Lamberti highlighted that as the housing market continued to play havoc with the United States and European markets, growth had slowed and the high demand for crude oil had dwindled slightly.

When the price of oil per barrel dropped from $145 to $135, it was a technical level to break with the $125 mark soon to follow, he said.

"We might see oil prices go to the $112 or $115 level.

"[However], supply side risks are still prevalent, demand growth out of Asia is still strong ... and non-Organisation of the Petroleum Exporting Countries [OPEC] has slowed production," Mr Lamberti said at the time.

While demand in the US and Europe may have slowed, it is unlikely to be enough to off-set the increasing demand for oil from Asia, Mr Lamberti said, adding China's economy was still growing at about 8 percent. - BuaNews

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