Petrol Price to drop by 67 cents on Wednesday.
This is probably the best news to many ears in South Africa. The retail price of petrol in South Africa will decrease by 67 cents to 13.66 rand ($1.2851) a litre from next Wednesday, its lowest since the start of the year, the department of energy said yesterday.
With so many increases in the petrol price over the last few months, this announcement is certainly welcomed. The petrol price has a ripple effect on everything.
The announcement of the petrol price is great news for diesel users as well. Wholesale diesel will fall by over 25 cents to 12.59 rand.
This decrease not only helps the general public, but businesses and the costs of other commodities too.
So why is Petrol so expensive?
According to the Department of Energy, the petrol price is directly linked to the price of petrol quoted in US dollars at petroleum export-orientated refining centres in the Mediterranean area, the Arab Gulf and Singapore.This means the domestic petrol price is influenced by (a) international crude oil prices, (b) international supply and demand balances for petroleum products and (c) the rand/US dollar exchange rate.
In other words, the basic fuel price (BFP) is based on what it would cost a South African importer of petrol to buy the petrol from an international refinery, transport the product from that refinery, insure the product against losses at sea and land the product on South African shores.
The lower petrol price is mainly due to a relatively stable rand exchange rate and a drop in international crude oil prices. (1 US dollar = 10.6295 South African rand).