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Another massive petrol price drop expected

Another massive petrol price drop expected

Petrol prices could drop by as much as R1 in February, according to economist Mike Schussler, following a continued drop in global oil prices.

The latest update from the Central Energy Fund (13 January 2015), shows that there is a current over-recovery of 112 cents per litre on 93 octane petrol and 110 cents for 95 octane.

Diesel shows an over-recovery of 109 cents.

These figures point to an easy R1.00 drop in the petrol price next month, provided the rand and oil prices remain at current levels.

“It seems the oil price collapse is just continuing, and the effect will be another big decrease in the petrol price next month which will save the economy much money,” Schussler told BusinessTech.

“It also seems the bottom for oil prices could be below $40 a barrel for Brent – and that means the price would have fallen by nearly two thirds. That has not happened in our working lifetime, ever.”

Schussler echoed sentiments expressed by investment strategist at Brenthurst Wealth, Magnus Heystek, saying that the continued drop in oil has given South Africa and much of the world “a very lucky break”.

According to Schussler, the fuel price reprieve will help the country’s GDP growth by between 2% and 2.5%, as the oil import bill will decline and consumers will have more money in their pockets to spend on other things.

Inflation would be much lower, the South African current account deficit would be lower, and retail sales and other service would also benefit.

“More money will stay in SA and that will also help the Rand somewhat,” the economist said.

“Some industries such as Trucking and Air Transport will see increases in activity and they will save hugely, as will farmers and the chemical industry. All round, this is good news for SA.”

However, Schussler noted that there was one big problem that could put a damper on all the benefits: Eskom.

“Just the power crisis could destroy this,” he said.

Looking at the longer term, Schussler believes that fuel price in coming months will be the lowest we’ll see in 2015.

“I suspect that oil will stabilise at some point and that February price could be a low for the year (or maybe March), but taxes will be increased and it will go back to, say, R12 per litre,” he said.

More on the petrol price

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Petrol price should keep dropping: economist

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Quinton is a business and technology journalist who dabbles in media and graphic design. He holds a degree in Journalism from the University of Johannesburg....

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Join the Conversation (23 comments)
  • Tuesday Is Soylent Green Day

    No doubt the taxpayer will be expected to bailout Sasol.

  • renegade

    If only the Dollar was following the same trend, but eskom won’t let that happen

  • Real Ist

    Will food prices reduce accordingly… don’t think so. They are quick to inflate those upon petrol increase.

    • CypherGate

      Exactly… They quick to increase food prices when petrol prices go up, but as soon as petrol comes down then you see no indication of food prices dropping. The companies just want to make as much money as possible and this would be their best opportunity.

      • Gene de Murro

        But you don’t make money without market share, and anyone who tries to profit off the lower input costs is at risk from competitors who pass some savings on. Collusion doesn’t really work because there’s no way for the cartel to enforce the agreement — unless the government protects it.

    • dv8ed1

      NEVAAAHHHH

      how else must they make money now…not much profit in petrol these days

    • Rio

      and on petrol decrease they push up prices still.

  • Sboniso Marcus Nzimande

    Ok now I can buy a vehicle

    • VaMutuki

      Do you have an e-tag?

    • Gene de Murro

      Even if the fuel is free, cars are expensive. They depreciate, they break down, they crash, they get stolen. Don’t get one just because you can afford the fuel!

  • Wait till the cANCer takes credit for it and claims that they “saved” the economy.

    • Thando Sikhosana

      Great point! I swear, these people would credit themselves for the sun coming up, if they could get away with it.

      • Kopano Konopi

        I think it will be stupid for anyone to take credit for this decline as it is public knowledge on what the price of brent crude is and why it is taking this knock unless some of us in the block as so ignorant and think that everyone is as ignorant as us

        • That won’t stop the cANCer from claiming it or their sheeple from believing it. That’s how we roll in RSA. Ignorance is the order of the day. Check our election results of the last 20 years. Check the state of our education system, public schools, maths and science results, 30% mark required to pass, and so much more. We are the laughing stock of the world. Actually it’s worse than that. We are the laughing stock in Africa. Even Zim surpasses us in education stats.

    • Wurnman

      saved it from the tyranny of aparthied’s oppression, is what they will say.

  • heinlex

    Keep in mind that the price drop will be short lived as the government will increase the RAF levy as well as taxing us further in April in order to rescue ESCOM. Forget about food prices going down. Keeping the lights burning is priority

  • bengine

    “…but taxes will be increased and it will go back to, say, R12 per litre,”
    Drop the price by R 1 and then add R 3 tax!!!

  • Wurnman

    “saying that the continued drop in oil has given South Africa and much of the world “a very lucky break”

    The quit before the storm. I have a sickening feeling all is not well.

    • Bard Stoltz

      I agree with you 100 persent. Something is up, and I suspect something bad is going to happen this year, globaly.

      • Wurnman

        What im thinking. The global economy is like a bubble on the edge of it’s own destruction.

    • Scruff304

      ^This^ I think most people don’t understand why the oil price has dropped so suddenly, and how it is going to overall have a negative effect on the economy is the great scheme of things.

  • felender

    Drop the food price

  • Gerhardus Erlank Struwig

    What is incredibly strange is the fact that the oil price has dropped less than half. And what I expect South Africa did is maintaining the fuel levy and everything in conjunction with the levy’s in such a way that the masses do not experience the benefit so that bad planning and mistakes made can be paid for and some elected few can be
    beneficiaries. And the power shortages in South Africa is an issue of bad planning. When a country expands in Private and Gov. sector etc increasing supply(but clever supply: investment=the supply the return the bonus and then reinvest, sustainability people!) on demand is the obvious thing. That goes for the state of the education in South Africa, if the standard is low the standard of the students will be low and we sit with an under qualified generation(Imagine and engineer produced in South Africa builds a tall building and it collapses on 100s of people). Crime is so ridiculous and this is due to the fact that the response on these activities are not at all at the level that is necessary. Under qualified and corrupt officials. ”Carte Blach hallooo” The south African Government makes me think of an child getting Ferrari and after a couple of years goes back to daddy and say:” Daddy it isn’t working anymore”. And he replies: ”You didn’t maintain and manage it properly. Explanation: The Country is the Ferrari, the countries people is the smart father, and the government is the child.”Eish”

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