Fuel Price Relief

Fuel prices in South Africa could come down a couple of cents in June if the rand/dollar exchange rate stabilises over the rest of the week and there are no drastic fluctuations in international fuel prices.

The latest figures from the Department of Energy show an average over-recovery of 18.8c/litre for petrol in the period March 31 to May 20.

This means that on June 2, the first Wednesday of next month, petrol prices could be reduced at least 18c/litre if factors affecting price remain the same until Thursday – the last day of the review period, on the basis of which June's price adjustment will be determined.

For diesel there is an over-recovery of 6.1c/litre.

An over-recovery of 6.1c/litre means that the public is currently paying 6.1c more for diesel than the basic price formula determines.

For paraffin there is an over-recovery of 5.2c/litre.

Petrol currently costs R8.72/litre for 95 octane in Gauteng, and R8.48 at the coast. Wholesale diesel costs R7.81 in Gauteng and R7.67 at the coast.

According to Bank of America Merrill Lynch’s weekly energy report, because of the weaker euro American oil prices last week fell from a high of $86/barrel two weeks ago to less than $70/barrel.

Researchers at Bank of America Merrill Lynch now think that their initial forecast of an average oil price of $92/barrel for the second half of the year was somewhat high. But they still expect oil prices again to break through the $100 level next year on the strength of the recovery of the global economy.

A building up of supplies of crude oil in the US has contributed to lower oil prices.

- Francois Williams