Petrol price expected to rise

By Staff Writer
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Petrol price going up again

The petrol price in South Africa is a tightly controlled commodity.

We have a bunch of bureaucrats whose sole task is to administer the price of petrol.

This is done via a complicated mechanism that is explained more fully on their website, but is designed to balance out the vagaries of international currency fluctuations and to take into account the various other logistic and production factors involved in getting the fuel to the pump.

This means that observers of the petrol price can start to make pretty accurate guesses as to which way it is going to move from month to month.

The last few movements have been in the way of a price cut, but this next round in February is expected to lead to a price rise.

The Mail and Guardian looked at this story and interviewed an expert on the petrol price fluctuations. This expert was of the opinion that the price would rise and that given the movements in the market that have been seen this month that the rise in the price of petrol would be between 30 and 50 cents.

Diesel, however, was not expected to rise.

'This is because of the actual demand for diesel falling sharply as it's important for industry and industry has slowed down'.

Business Day also looked at the issue of the expected petrol price rises. The daily recovery fund has been under recovered to around 42 cents per litre.

'An under recovery happens when consumers pay too little for fuel products on a particular day, and an over recovery is when too much is paid'.

This has in part been fuelled by the weaker Rand and by extension a change in the price of oil is reflected and magnified by our weaker currency.

Diesel products were also reported as not being expected to rise in price. This was due to other factors in involved in pricing diesel, one of which was demand, which has fallen as a consequence of the global financial crisis, as manufacturing outputs decline.

Another economist interviewed in the article felt that we had seen the last of the large petrol price increases for the year as both the Rand and the price of oil were expected to recover leading to the two effectively balancing each other out.

iAfrica also carried this story adding that the prediction for the price of oil, at the end of 2009, would be either $40 a barrel or $80 a barrel, the discrepancy between these two figures shows the demand price difference between a 'growing' economy and the situation we are in now, where deflation is a factor.

The $80 a barrel price would only happen if the US manages to kick start its economy.

Business Day further reported that Asian oil prices rose slightly on expectations of the economic stimulus packages that are being crafted in an attempt to prop up demand and bolster production.

There have been worldwide decisions to lower interest rates and to increase government spending in order to get the worlds economy out of crisis.

Justmoney knows that things will get better, but while times are tough reckons that it would be better to get a nice safe savings account, keep a really beady eye on your budget and wait until the markets have calmed down and found their stability again.

 

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