Fuel’s gold! Petrol prices to drop even lower, come September.

After last month’s decrease in fuel prices, South Africans can rejoice even further: September is expected to bring even further reductions. August saw a 52-cent decrease, while diesel now costs 76 cents per litre less.

Paul Joubert, senior researcher at Solidarity Research Institute, is of the opinion that the petrol price will fall by another +/- 50 cents per litre on 2 September, while the wholesale price of diesel should drop by about 43 cents per litre as well. These are estimations, which may change over the course of the month, are due to our temperamental South African Rand and oil prices going through a rough ride at the moment. As of this morning, the Rand traded at R12.87 vs. the US Dollar while South Africans in the UK are laughing all the way to the bank: 1 GBP amounts to an eye-watering R20.15. (Courtesy of XE.com)

However, it is unlikely that fuel prices will increase. The oil-industry, with its history of ups and downs, is in the doldrums. Companies that made record profits in the recent years, have had to give more than oil 100 000 oil workers the sack, due to the price of a barrel of oil being under 50 USD. Analysts say that that the likelihood of oil prices rising to 90 - 100 USD a barrel (in the near future) is not great.

Despite the fact that our Rand is as weak as a family sedan with a non-turbocharged, one-litre engine, we are still reaping the rewards of the reduced international petroleum product prices.
But why is oil less expensive than before? It all comes down to supply and demand. Since the devaluation of China’s currency, Saudi, Algerian and Nigerian oil is now competing for Asia and are forced to reduce their prices. The Russians and Canadians are still pumping oil like there’s no tomorrow, while the Iraqis are producing more than ever.



OPEC, a cartel of oil producers, have been pressured by Iran, Venezuela and Algeria to cut production which will stabilize prices, but the UAE, Saudi Arabia and other Gulf states won’t let up. According to Saudi Arabian officials, they will lose market share if they do so, which will merely make their competitors richer.

Also, European economies as well as those of developing countries are weakening, and there is a trend in vehicles (and factories) becoming “greener”. The world seems to be slowly waking up to the fact that the burning of fossil fuels is indeed impacting the environment negatively.

In the meantime, let’s all look forward to not flinching when we sign the till slip at the petrol station.