Ever-higher fuel prices on the horizon, say analysts

While the price of petrol will drop back below R10 next week, analysts are predicting price hikes for the rest of 2011.

Motorists should not celebrate the announcement of a decrease in fuel prices and prepare for significant hikes for the remainder of 2011, analysts said on Friday.

The energy department announced a decrease of 33c a litre in 93 unleaded petrol (ULP) and lead replacement petrol (LRP) from next Wednesday, along with a drop of 31c a litre in 95 ULP and LRP petrol.

Accordingly 93 octane fuel will retail at R9.62 a litre at the coast and R9.92 in Gauteng. This marks the first drop back to below R10 a litre since May.

The petrol decrease was coupled with drops of 11c and 12c a litre in diesel fuel with 0.05% to 0.005% sulphur content respectively, as well as a decrease of 12c a litre in the wholesale price of illuminating paraffin.

“The fuel price will be depressed for the moment but expect it to bounce back quickly as international oil prices stabilise,” chief economist at Investment Solutions, Chris Hart told the Mail & Guardian.

“The strong rand will allow for some further respite, but as the local currency weakens towards the end of 2011, consumers should expect fuel increases,” Hart added.

This sentiment was echoed by Jeff Gable, chief analyst at Absa Capital, who also believes the South African public should prepare for higher prices of fuel due to ever-escalating oil prices.

“Prices are going to escalate from here and over time we are going to have to get used to petrol prices in double figures,” Gable told the Mail & Guardian.