Lower Petrol Prices may ease Travel Costs over the Festive Season

The petrol price could decrease by 45 cents a litre in December as international petroleum prices started declining in November, according to the Automobile Association (AA) earlier today. The AA was commenting on unaudited mid-month fuel price data released by the Central Energy Fund (CEF).

“International oil prices remained stable throughout October, but have been in decline since November began,” the AA said. “The rand / US dollar exchange rate firmed over the same period, making a welcome contribution to the picture.” It said data suggests a reduction in the petrol price of 45 cents a litre, with diesel down by 38 cents and illuminating paraffin enjoying a 40 cent reduction.

The petrol price increased by 45c a litre in November, pushing the petrol price for inland motorists to R13.05 a litre and coastal motorists will pay R12.57 a litre for petrol. However, the AA sees the petrol price alleviation as a short-term boost. The rand has weakened sharply against the dollar in the wake of the US election results and if the local currency does not return to previous levels under R14/$, the fuel price picture could be quite different by December, said the AA. “In addition to short-term fluctuations, the rand remains exposed to a possible ratings downgrade in South Africa,” the AA commented. “The currency is now also vulnerable to possible shifts in US policy when president-elect, Donald Trump, takes office early in 2017,” it said. “While the expected reduction at the pumps ahead of the 2016 Christmas season is welcome, South Africans would be prudent not to expect sustained drops in the fuel price over the next few months,” the AA said.

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