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Prepare for cheaper fuel at the pumps tomorrow

by , 04 August 2015

From midnight, a fall in the price of petrol will offset the hike seen at the beginning of July.

International oil prices have helped to lower the cost of petrol in spite of the rand's weakening trend.

Let's take a closer look at what's going on…

The petrol price is falling more than forecast

Two weeks ago, data released by the Central Energy Fund suggested that a petrol price drop could be on the cards for August. The data hinted that a cut of 21c a litre could be on the cards.

The reality is much better news for motorists…

As of midnight, the Department of Energy says that “all grades of petrol will cost 51c a litre less,” says Fin24. For the drivers of diesel vehicles, the cut is even more substantial, ranging between 73.82c and 75.82c a litre depending on sulphur content.

The oil price is helping to drag down the petrol price

The reduction in the petrol price will help motorists to contend with the recent run of hikes to the key energy source.

The drop in the petrol price is due to the fall in the international prices of petrol, reports BDLive. This fall has helped to offset the rand’s demise against the dollar.

During the period under review, the average rand dollar exchange rate has weakened from R12.3196 to R12.4128, adds BDLive.

Not only is this good news for motorists, but it’s also good news on the inflation front, says Kevin Lings, chief economist with Stanlib, notes IOL. He said this should help to shave up to 0.2% off the “monthly consumer inflation rate”.

But Neil Roets, the CEO of Debt Rescue, told Fin24 that “the relief could be short-lived, taking into account that other economic indicators remain largely negative”.

So good news for the short-term. But with the rand showing further weakness at the moment, South African motorists are vulnerable to the activity of the oil price.

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Prepare for cheaper fuel at the pumps tomorrow
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