South Africans can yet again, breathe a sigh of relief as the petrol price will decrease. The Department of Energy announced on Sunday that petrol will be decreasing by 30 cents per litre.
Economists are saying that the petrol decrease is due to the strong Rand. The Rand strengthened from R13.23 to R12.20 during the period under review.
The strong Rand countered the rising price of brent crude oil during this period. The petrol price will decrease from midnight on Tuesday 6 February.
The Rand has remained strong since the appointment of new ANC President, Cyril Ramaposa. The Rand has strengthened so much that it countered the increase in Brent Crude Oil.
The Brent Crude Oil price increased from $64.08 to $69.11 per barrel during the review period. During January this year, the Oil price reached a three-year high of $70 per barrel.
The fuel prices change on a monthly basis, depending on the strength of the Rand, as well as the import costs of Brent Crude Oil.
“The rand appreciated, on average, against the US dollar (from R13.23 to R12.20 per USD) during the period under review. This led to a lower contribution to the basic fuel price on petrol, diesel and illuminating paraffin by 52.85cpl, 54.66cpl and 54.88cpl respectively,” said the Department in a statement.
These are the following decreases in fuel prices for the month of February:
Economists predict that the Rand will continue to strengthen, this meaning that the petrol price could decrease further in upcoming months. The Rand is at its strongest since 2015.
The table below shows the new fuel prices expected for February 2018:
According to the Automobile Association (AA), last year saw some of the highest petrol prices the country has ever seen.
In their recent statement last week, the AA advised government to think about their governance moves, rather than making erratic change. They said that this results in the weakening of the Rand, which ultimately “affects poorer people disproportionately”.
The petrol price increased drastically last year, due to the firing of former Finance Minister, Pravin Gordhan. The Rand then took a further tumble during December last year, when it was at it weakest. In the middle of December 2017, the Rand was trading at a whopping R14.76 to the Dollar.
That all changed after the ANC Conference late December and the Rand might potentially strengthen further as the State of the National Address (SONA) approaches.
If President Jacob Zuma is sent packing, consumers could be in for a treat as the Rand could soar against other foreign currencies.
Time will tell what the outcome of the President’s future will be. In the meantime, why not breathe a sigh of relief as you fill up your car this month!