The South African retail petrol price is likely to be increased once again in March if the Organisation of Petroleum Exporting Countries’ (Opec) basket price remains above $38 per barrel and the rand stays near R6 per dollar. On Monday, there was already an under-recovery of almost 20 cents per litre (c/l).
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.
Data published on Tuesday show there was a 19,981 c/l under-recovery in the unleaded petrol price in South Africa on January 10, while for diesel 0,3% sulphur it was 10,362 c/l.
The averaging period for the February retail price change is from December 27 to January 25, while for March the averaging period will be from January 26 to February 25.
As the average over-recovery for the period December 7 to January 10 is still 29,680 c/l for petrol and 33,623 c/l for diesel, a small reduction is still likely for the February retail prices.
The retail petrol price was a record 485 c/l in Gauteng in November and 472 c/l at the coast, but this was reduced by only 19 c/l in December — instead of 26c/l based only on exchange rate and product price movements — after the slate levy rose by 4 c/l, the wholesale margin by 2 c/l and service cost by 0,3 c/l, with a 0,7 c/l rounding added for good measure.
In January, the retail petrol price dropped by a further 44 c/l and the diesel 0,3% sulphur by 38c/l.
The basic petrol price on January 10 was 197,994 c/l, 22,7% less than the peak 2004 price of 256,065 c/l reached on May 20, but 22,2% more than the 2004 low of 162,064 c/l reached on December 29 when the rand was at R5,6425 rand per dollar and the Opec basket price was $35,54 per barrel.
On May 20 2004, the Department of Minerals and Energy announced that the government was concerned about the current and projected future increases and had requested the department to, within the limited resources, investigate options to cushion anticipated fuel-price increases.
“Should the options that are currently being investigated prove viable, consumer prices increases should be kept as low as possible for as long as possible,” the department said at the time.
Prior to 1991, the government changed the retail price of petroleum product prices only infrequently and some people are hoping that the announcement will herald a return to this policy, but South African financial markets have so far been kept in the dark whether this is in fact the case — even though more than 200 days have elapsed since May 20.
The price of the Opec reference basket has been above the upper limit of the cartel’s target range of $22 to $28 a barrel since early December 2003, but came off sharply in November and December from its record peak of $46,61 per barrel reached on October 21 2004.
The basket’s lowest level in 2004 was $28,09 per barrel, which was reached on February 9.
In January this year, the Opec basket price surged by 12,8% from $35,67 on January 3 to $40,12 on January 10, its first move above $40 per barrel since early November 2004.
Set in 1986, the basket is based on the average prices of Algerian Saharan Blend, Indonesian Minas, Nigerian Bonny Light, Saudi Arabian Arab Light, Dubai Fateh, Venezuelan Tia Juana Light and Mexican Isthmus crude oils.
A move to a basket of 11 crudes representing each of Opec’s members is under discussion as well as an increase in the target band. — I-Net Bridge