The Department of Energy in the Republic of a South Africa announced on Friday that the price of petroleum products would decrease from Wednesday the third of December. According to the announcement, the drop would affect the retail price of both grades of petrol, diesel and illuminating paraffin as well as that of LP gas.
The drop in the price of fuel comes hot on the heels of another albeit much lower reduction which occurred in October. This time around, the price of both 95 and 93 grade petrol would drop by 69c per litre while Diesel (0.05% sulphur) would be reduced by 53.50c per litre. The diesel with less sulphur, 0.005%, would be 54.30c cheaper per litre come the third of December. The lowest decrease will be in the wholesale price of illuminating paraffin which will go down by 49.30c/l while the LP Gas will see the largest increase as it gets 125c per kilogram. These decreases mean that the price of petrol will go down to R12.47 per litre while diesel will cost motorists R11.31 per litre.
Speaking about the prices and their causatives, the department of energy said the decreases were on the back of similar or proportional decreases in the price of crude oil, which is said to have decreased to $76.30 per barrel, its lowest price in four years. In addition, the department said that there is no likelihood of the OPEC countries reducing production of crude oil in order to support the price of the commodity. This seems to be what is emerging from the meeting of these countries as they meet in Austria. Several world economist have said that the price of crude oil could slide to as low as $60 per barrel if the OPEC countries do not agree to a significant cut in production to protect the price.
Several economists in South Africa have welcomed the reduction coming as it does a few weeks before the festive season. Mike Schüssle of economists.com is quoted as saying that the decrease in the price of petroleum products would help to slow down inflation and would also give the South African Reserve Bank the much needed excuse not to increase the interest rates. He added that, more tangibly, the fact that the price of fuel will be at its lowest since May last year means that the average motorist will save an average of R280 rand per month on fuel costs. In addition, Mike Schüssle said it meant that, this being a busy time on all fronts, the truckers and farmers would get much needed relief since there will be lots of trucking of goods around the country and, for farmers, the fact that it is the planting season means that they will do this at a lower cost than they otherwise would have.