Related Articles
Top Stories
May 27 2012 11:21
There's a price war raging between South Africa's cellphone networks after Cell C lowered the rates of its prepaid calls by more than 34%.
May 27 2012 11:49
The country's 200 000-odd Tupperware agents are angry about the counterfeit products being sold as the real McCoy.
May 27 2012 13:09
The oversupply of golf estates has claimed another victim.
Johannesburg - A cut in the petrol price of between
40c and 50c can be expected next month as the rand continues to surge and the oil price remains under pressure, according to a leading economist.
Russell Lamberti, economist from ETM, says there is a lot of pressure on growth-related commodity prices.
"Growth-related commodities like oil and copper are looking toppish," he says.
"The big story is also the rand," he adds.
Lamberti says his research shows that a daily product over-recovery is coming through in South Africa already as a result of these factors and this over-recovery will get quite large quite quickly i.e. in the next few days and weeks.
"The average over-recovery could be in the order of 40-50 cents, which can be used to justify a cut," he says.
This comes after the retail price of all grades of petrol increased by 36c a litre on Wednesday September 2, hitting struggling consumers' pockets.
If the cut happens, petrol in Gauteng will cost between 755-765c a litre from 805c before, and 732-742c at the coast from 782c before.
The last hike in prices came as the average rand/US dollar exchange rate weakened when compared to the previous period. The average rand/US dollar exchange rate for the period 31 July 2009 to August 27 2009 was R7.9913 compared with R7.9840 during the previous period.
The rand, though, is currently well off those marks at R7.4116 to the dollar from a close on Monday of R7.4525 and is at its best closing levels since August 5 last year.
Near-dated Brent oil futures were last at $67.01 a barrel from $75.51 in early August. It dipped below $70/bbl in late August and has held that mark for most of September so far. There was a small blip to $70.24 on September 9, but it has been trending down for four trading days since then, virtually placing
the writing on the wall for a cut in petrol prices.
An over-recovery means that the basic petrol price based on the daily product price and exchange rate is less than the basic fuel price used in the calculation of the monthly retail petrol price.
An over-recovery therefore implies that the retail petrol price can be lowered at the next monthly price adjustment, provided the government does not introduce a new levy or raise either the wholesale or retail margin.
The retail petrol price is adjusted monthly on the first Wednesday of the month in accordance with the previous averaging period's over- or under- recovery.
- I-Net Bridge