The Department of Minerals and Energy (DME) could implement a retail petrol price cut of about 73 cents per litre (c/l) on July 4‚ provided the daily under-recovery remains near the June 18 level. The wholesale diesel (0.05% Sulphur) price could drop by around 52c/l.
If a 73c/l decrease were to be implemented‚ then this would lower the Gauteng retail petrol price to 1‚094c/l from May’s record 1‚222c/l.
The record for the wholesale diesel price of July 2008 was 1‚143c/l and if a 52c/l cut is implemented‚ then it would be 1‚021.55c/l in July 2012.
The year ago increase for petrol will ease to 10.3% in July from 14.1% in June‚ 26.2% in December and 29.4% in November. The year ago increase for diesel will ease to 11.6% in July from 15.9% in June‚ 37.9% in December‚ and 34.2% in November.
Base effect and a continued strengthening in the rand and weaker international oil prices make it likely that we could see year ago price declines before the end of this year‚ creating the space for the South African Reserve Bank to cut interest rates as consumer inflation dips back into the 3% to 6% target range. The May consumer inflation data will be released on June 20.
SA’s daily unleaded 95 Octane petrol price over-recovery was 77.6c/l on June 18‚ while the diesel over-recovery was 55.8c/l.
An over-recovery means that the basic petrol price based on the daily product price and exchange rate is less than the basic fuel price used in the calculation of the monthly retail petrol price.
An over-recovery therefore implies that the retail petrol price will most probably be cut at the next monthly price adjustment‚ provided the government does not introduce a new levy or raise either the wholesale or retail margin.
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.
The current averaging period runs from June 1 to June 28 and a price announcement is due on Jun 29. The average over-recovery for the period June 1 to June 18 for petrol was 69.3c/l and the over-recovery for diesel was 49.2c/l.
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