Weak oil may save SA motorists pain at the pumps | Fin24
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Weak oil may save SA motorists pain at the pumps

Dec 15 2015 20:08

Cape Town - Despite the rand rout in the wake of President Jacob Zuma's finance minister blunder, South African motorists could be spared major pain at the pumps at the end of the month.

According to the Automobile Association, sliding global oil prices have offset the rand's plunge to all time lows against the dollar following Zuma's axing of Nhlanhla Nene last Wednesday to replace him with largely unknown ANC MP David van Rooyen.

Zuma's U-turn on his choice of Van Rooyen to Pravin Gordhan on Sunday brought some calm to the markets but by Tuesday morning the rand was still in the doldrums, trading in a range of 14.86 - 15.16 against the greenback.

In the days following Nene's relegation to the Brics Development Bank, the local unit plummeted to R16.05/$ from R14.54 before the news last Wednesday.

The flip-flopping of finance ministers also came just days after ratings agency Fitch downgraded and Standard & Poor's announced a revision to SA's credit ratings from stable to negative.

Commenting on unaudited fuel price data released by the Central Energy Fund, the AA said the price of petrol is largely unchanged, with diesel due for a substantial drop of up to 50c a litre.

The price of illuminating paraffin is down by 43 cents.

The AA said that without the current rand weakness, these drops would have been up to 20c higher.

"Although the rand has recovered some of its losses, the current flattering fuel price picture is solely due to continued weak oil prices.

"We can therefore be grateful that oil prices remain weak, and that the rand recovered some ground following the re-appointment of Pravin Gordhan as Finance Minister on Sunday," the AA said.

The AA was, however, cautious of pinning its hopes on further drops in the oil price, "especially since the month still has 15 days to run".

"We don't think the rand's recent weakness has yet been fully reflected in the fuel price, and if oil prices tick up, the results could make for a very bleak new year for South African motorists and commuters," the AA cautioned.

"We advise motorists to moderate their expectations of a fuel price drop in January."

aa  |  pravin gordhan  |  jacob zuma  |  nhlanhla ­nene  |  oil  |  sa economy  |  fuel  |  petrol


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