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More vooma for motorists as petrol price set to drop by 59c

By on February 17, 2016
 
TURBOCHARGED: Relieved motorists will be cheering after the expected drop in the petrol price next month

TURBOCHARGED: Relieved motorists will be cheering after the expected drop in the petrol price next month

CASH-STRAPPED motorists can look forward to a little more cash in their pockets with the petrol price expected to drop by nearly 60 cents a litre next month.

Consumers could be paying between 56c and 59c less for petrol – with about 11c mainly attributed to the gains in the rand, according to the Automobile Association of SA.

Diesel and paraffin are expected to increase by 7c and 10c a litre respectively.

The expected price drop is largely due to the rand firming slightly against the US dollar and continued weakness in oil prices.

The drop will effectively ease financial pressures brought on by rising food prices and higher interest rates.

“The rand has recouped some of its losses against the dollar and traded in a fairly narrow band since the end of January,” the AA said in a statement.

Nelson Mandela Bay economist Derek Zimmerman said if there were to be a 50c a litre price drop in petrol and diesel, consumers could save R12.79-billion across the country.

Car owners could see more than R1 200 back in their pockets this year – using 2010 data on the number of cars in the country.

“The total vehicle fleet in South Africa for 2010 was about 10 million vehicles, which would put the savings at R1 278.50 per vehicle for the year,” he said.

“These figures demonstrate the high degree of reliance on fuel in South Africa for our production and consumption, and the sensitivity of our economy to the fuel price.”

Zimmerman said because of the prevailing low dollar prices of crude oil, the country could see another 50c a litre price decrease in the near future.

Economist Mike Schussler, however, was not too sure, saying while the oil price might remain low, the vulnerable rand made it difficult to say.

“The rand will be the biggest driver of the petrol price,” he said.

“This year we are likely to see fuel prices going up rather than down, unlike we’ve seen in the last 18 months.”

With Finance Minister Pravin Gordhan due to table his budget speech in parliament next week, Schussler said South Africans should expect at least a 30c increase in the fuel levy, which would be effected next month.

The expected price drop has been welcomed, with businesses saying it will put much-needed cash back in financially battered consumers’ pockets.

Uitenhage transport, delivery and removals company Liam Levi manager John Williams said the price drop would be a huge relief for the company, which could see its R7 500 average monthly fuel bill go down significantly.

Nelson Mandela Bay Business Chamber chief executive Kevin Hustler said: “It is no secret that most businesses are under immense strain with the economic downturn.

“Keeping costs as low as possible will be top of mind for many businesses this year, while we look at new ways of stimulating growth.”

Last January, a litre of petrol cost consumers R10.83, while diesel cost R9.98 a litre.

A year later, petrol and diesel were at R11.94 and R9.72 a litre respectively. – Additional reporting by Ntsakisi Maswanganyi


 
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