Mid-month data reports points to more festive season cheer at the pumps in January, according to the AA. Photo: Neil McCartney
Mid-month data for December fuel prices, points to another month of welcome diesel and petrol price relief, which should ease the usual pain experienced at the pumps by Mzansi motorists.
Going by the latest figures from the Central Energy Fund (CEF), possible diesel price decreases of R2.09 (500ppm) and R2.14 (50ppm) are on the cards.
If the favourable conditions continue, leading to a R2 decrease for the December diesel price, the positive knock-on effect on transportation costs, could contribute to slowing the general inflation rate in early 2024.
Although the month-average is pointing to a decrease of about R1.05 for 93 Unleaded petrol, if current trends persist, that number is likely to fall well below the R1 mark – as the latest daily numbers show a diminished over-recovery of about 42 cents.
If the over-recovery persists on the same path, a rather dismal petrol price drop of about 60 cents might be the reality for holidaymakers hitting the open road during the festive season.
The wholesale price for 50ppm diesel stands at R23.69 at the coast and R24.40 inland, but this excludes the retail margins which vary between outlets as this fuel is unregulated unlike petrol.
The retail price of 95 Unleaded petrol, after this month’s very welcome R1.78 decrease, stands at R23.18 at the coast and R23.90 inland, where 93 Unleaded costs R23.44.
Domestic fuel costs are primarily governed by the rand/dollar exchange rate and global oil prices. In South Africa, the fuel price is adjusted on the first Wednesday of every month based on these two factors.
For December, lower oil prices have been working in the favour of lower prices, while a moderately stronger rand has also been adding to the over-recovery.
International oil prices have softened in the past few months, with Brent Crude oil having weakened to about $82 from a September high of close to $98.
This is reportedly as a result of concerns over slow economic growth and the resulting demand for fuel, which has outweighed supply cuts by OPEC and its allies, coupled with the conflict in the Middle East.
However geo-political events remain a risk and could result in more oil price volatility, the International Energy Agency warned.
Our currency unfortunately remains a risk, although a “more stable” rand is contributing about 30 cents to the petrol price over-recovery and 35 cents in the case of diesel, according to the daily CEF snapshot.
At the time of writing, on 16 November, Brent Crude oil price hovered around $82.85 with the rand trading at R18.20 against a softer dollar.
According to the Department of Mineral Resources and Energy (DMRE), the CEF’s daily snapshots on the over-recovery and under-recovery of the basic fuel price do not encompass other possible modifications.
The department determines these adjustments, after considering various factors such as slate levy adjustments or retail margin changes whereby the controlled prices are adjusted on the first Wednesday of each month.
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