By Fanie Brink*
Fuel prices are expected to decline even further in July. According to the latest information from the Department of Energy announced this morning, the price of gasoline 93 (ULP & LRP) in Gauteng can decrease on Wednesday, 5 July 2017 by 67.6 cents per litre and the price of diesel with a 0.005% sulphur content by 60.7 cents per litre, says independent economist Fanie Brink.
The main reasons for these expected price reductions can mainly be attributed to the decrease in the average monthly crude oil price to almost $45 a barrel. The lower crude oil price can still be attributed to the inability of the Organisation for Petroleum Exporting Countries (OPEC) to reduce the crude oil surplus in the international market, as well as the sharp rises in production of crude oil and the stock levels of fuel in the United States. The average monthly crude oil price is currently only about $10 a barrel higher than the lowest level for the past 10 years of just above $35 a barrel at which it traded at the beginning of 2016.
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Due to the decrease in the crude oil price, the lower average international petroleum prices could result in a decline of 65,1 cents per liter in the gasoline price and 58,2 cents per liter in the wholesale price of diesel.
The exchange rate was very volatile during the past month and traded between R13,10 and R12,70 against the US dollar, which can bring a further decline of only 2.5 cents per litre in both the gasoline and the wholesale price of diesel.
The final price changes will be announced towards the end of the month by the Minister of Energy.
- Fanie Brink is an Independent Agricultural Economist
