By Thebe Mabanga
Consumers are likely to breathe a sigh of relief this week, with petrol prices expected to drop sharply on the back of a stronger rand, driving an over-recovery in December and softer global oil prices.
“The price of all grades of petrol is set to come down by between 62 and 66 cents this week,” government said in a statement on Monday.
On Wednesday, a litre of 95 Petrol 95 will decrease by 66 cents a litre to cost R20,75 cents in Gauteng and R19,92 at the coast. A litre of 93 petrol will fall by 62 cents.
Government further announced that the price of Diesel (0.05% sulphur) is set to decrease by R1.37 cents a litre, while the price of Diesel (0.005 % sulphur) will come down by R1.50 cents a litre.
The price of Illuminating Paraffin (wholesale) is set to come down by R1.10 cents a litre and the price of Illuminating Paraffin (wholesale) will fall by R1.48 cents a litre.
The Maximum Retail Price of Liquefied Petroleum Gas will increase by 21 cents per kilogram and 23 cents per kilogram in the Western Cape.
The decrease is due to lower oil prices and a stronger rand. According to the Department of Mineral and Petroleum Resources, the average Brent Crude oil price decreased from 63.55 US Dollars (USD) to 61.47 USD during the period under review.
On Monday, the price of Brent Crude Oil fell below $60 a barrel due to oversupply of 3,85 million barrels a day and an undertaking by the Organisation of Petroleum Exporting Countries (Opec) to maintain supply. Goldman Sachs forecasts an oil price of $56 a barrel for the year ahead.
The oil price has not been affected by the events in Venezuela, where America staged a military attack over the weekend and arrested President Nicolas Maduro and his wife Cilia Flores.
At the same time, the rand started the year on a stronger footing and at lunchtime on Monday was trading R16,45 cents to the dollar.
Rand strength is due to higher commodity prices, most notably gold, which is trading at record levels, economic reforms being implemented in the South African economy, as well as lower inflation, anchored by the new inflation targets of 3% announced in November last year.
The lower fuel price will benefit a number of sectors in the economy and help keep inflation low in the short term.
INSIDE POLITICS