Experts predict no major change in petrol prices next week

As South African motorists brace for yet another announcement on fuel prices, experts stand divided on whether the increases seen in February will continue into March.

With recent fluctuations in both the rand and international oil prices, predictions vary widely, creating a climate of uncertainty for consumers.

After a series of four consecutive fuel price increases, the next crucial update will be revealed soon.

Johann Els, Old Mutual Group chief economist, said Tuesday that he believed there will be no change in the fuel price when the announcement is made next week.

“As of Friday 21 February there was a 28 cents per litre over-recovery in the fuel price. The running average price for the month is minus 3.2 cents per litre," Els said.

"So for the petrol price for next week my expectation is that there will be no change in the petrol price.”

Els said he believed there will be no change due to there being an overrecovery on a daily basis and a very small underrecovery on a monthly average.

“I suspect that will be worked to zero. So the petrol price will be unchanged and other factors we can attribute to such is a slightly lower oil price but more especially a slightly stronger Rand exchange compared to the petrol price at the beginning of February.”

Efficient Group chief economist, Dawie Roodt, said that he expected a very small change in the petrol and diesel price next week.

“It might increase or decrease by one or two cents. The main reason for that is that the price of international Brent crude oil and the rand exchange rate has been unpredictable,” Roodt said.

“We have found instances where the price of oil is increasing and the rand is strengthening and these two factors have neutralised one another so basically very little or any change in the petrol price can be expected.”

Annabel Bishop, chief economist of Investec, said that data from the Central Energy Fund indicated that there won’t be much change to the fuel price in March.

Waldo Krugell, an economist professor from North West University, said that after a tumultuous February motorists might be worried about the next fuel price increase in the first week of March.

“The Central Energy Fund shows that they are likely to get another fuel price increase, but it will be a small one,” Krugell.

“Based on Friday’s numbers the petrol price will increase between 3 cents and 16 cents per litre, depending on the grade. The diesel price will increase between 6 cents and 12 cents per litre.”

Krugell added that the increase was due to an average weaker rand-dollar exchange rate, but that is compensated for by a slightly lower average crude oil price.

Professor Irrshad Kaseeram, from the University of Zululand’s economics department, said that indications were that there will be a marginal rise in petrol around 3 cents and even a possible decline in diesel price in a similar price range.

“These changes in prices are due to exchange rate depreciation, world oil prices stabilised at around $75 (R 1 376) per barrel.”

Tracey-Lee Solomon, an economist from the Bureau for Economic Research, said that according to the Central Energy Fund, fluctuations in the rand exchange rate and international petroleum product prices indicate a R0.03 increase in the price of petrol 95, while diesel prices were expected to decline by R0.05 to R0.11 per litre.

“The latest available data, up to and including 21 February, shows that a stronger rand has helped offset potential fuel price hikes, whereas rising international product prices have exerted upward pressure,” she said.

Solomon added that since 5 February, the rand has remained relatively stable despite domestic disruptions, including the postponement of the February Budget speech.

“While the rand briefly weakened following the announcement of the delay, it quickly recovered to below its pre-budget levels the next day.

“Although Brent crude oil prices have averaged lower in February, attacks on Russian refineries and adverse weather affecting US refineries have led to an increase in refined product prices. Since 21 February, both the rand exchange rate and oil prices have remained subdued, sitting below their respective February averages.”