# General Business Category > Business Finance Forum >  Petrol price increase

## Chatmaster

Well it seems we are heading for a very big increase in fuel prices for the end of this month.

I know the subject has been touched so many times all over the world, but if there is one thing I do not understand, it is why SA with it's mighty SASOL has never been able to get rid of the Arab hold and sorted out our fuel prices. As everyone here knows, I am far from the expert when it comes to financial issues, however the way the oil price is calculated makes no sense to me, not to mention the rate at which it has been increasing the last couple of years, Surely there must be other options for us?

----------


## Dave A

My question is would a free market system for pricing work?

Sasol probably could supply fuel at a much cheaper rate than the current price, which is after all based around the costs of imported crude only. But I can see problems there. For starters, there is no meaningful competition.

If you fix the price lower by factoring in Sasol's cost, you'd need to have cross-subsidisation for fuel made from imported oil.

Maybe the only solution is to hold shares in Sasol. At least that way you can get some of your money back.

----------


## RKS Computer Solutions

:Whistling:  Now might not be a good time to mention that I used to work on a contract basis for SFF (Strategic Fuel Fund), the guys and gals that decide what the petrol prices should be in SA  :Whistling: 

I can't see why a free market system wouldn't work.  If Sasol could supply fuel to SA at their prices, instead of the going price calculated on the price of oil, we might just be able to get lawnmower engins for our bicycles...

----------


## Dave A

> If Sasol could supply fuel to SA at their prices, instead of the going price calculated on the price of oil,


The question though is would they, or would they just undercut the others a little.

Or even if Sasol was drastically cheaper, what would happen to the suppliers of the "expensive" fuel. You still need them because Sasol can't provide the full requirements of the country.

----------


## Chatmaster

I don not have the facts, but as I understand, most of the fuel we are using is mixed with Sasol in some way. If this is the case than certainly we are able to buy the 'expensive' petrol and pay for it as the whole world does, but we buy Sasol at a reasonable price. That in itself will make petrol much more affordable. The other side of the coin is probably, what if the oil price falls again and Sasol fuel becomes more expensive, mmmmmmm I doubt that will happen anytime soon.

----------


## daveob

Of course there is an alternative - electric cars.

 :Smile:  :Big Grin:  :Smile:  :Big Grin:  :Smile:

----------


## Dave A

> Of course there is an alternative - electric cars.


Yep - just plug them into the wall and recharge them between load-shedding episodes  :Stick Out Tongue:

----------


## Dave A

The retail price of petrol will increase by 50 cents a litre (c/l) on Wednesday next week, according to a statement from the Department of Minerals and Energy on Friday. 

This follows the 55c/l increase last month. 

The price of unleaded petrol in Gauteng thereby increases to R9,96 a litre, and to R9,72 at the coast. 

Diesel 0,05% sulphur goes up by 71 cents, 0,005% by 70 cents and wholesale paraffin by 71 cents. Illuminating paraffin shoots up by 94 cents. 

Diesel in Gauteng now costs R10,80 a litre, and R10,66 at the coast.
full story from M&G here

----------


## Dave A

Time to get really nervous?



> The Russians undermined Opec's attempts to talk down the oil market on Tuesday by warning that crude prices could almost double to $250 a barrel within 18 months.
> 
> The prediction from Alexey Miller, chairperson of Gazprom, came as the price of oil leaped $2.75 to $137.10 a barrel even though Opec insisted everyone was already "panicking" unnecessarily and stressed there were no shortages.
> full story from Business Report here


There seems to be some argument about whether there are capacity problems or not. OPEC is trying to say the increases are unjustified. Some are blaming speculators for driving the price up.

Well, if it is speculators, easing supply concerns with a healthy oversupply for a little while would drive them out of the market real quick. But I don't see OPEC *talking* their way out of this one.

----------


## IanF

If OPEC wanted to they could sell their production forward for a few months this would probably see the price fall. Unless there is a genuine shortage. Anyway the prices will reduce consumption but with a lag effect. Just think of buying smaller cars, working 4 10 hour days instead of 5 8 hour days. And loads of other things everyone is doing.
It will be interesting to see who gets caught in the fall out.
(I hope there is one)

----------


## Dave A

Here is one solution - fill and run!



> High fuel prices are leading some South African motorists to take desperate measures, such as filling up and driving away from service stations without paying.
> 
> It's a relatively unexpected development given the presence of petrol attendants at the point of sale on forecourts.
> 
> Fuel Retailers' Association chief executive Peter Morgan said yesterday that an incident in which an Empangeni petrol attendant was knocked down and had to be hospitalised on Tuesday night was not isolated.
> 
> "There have been about 10 similar incidents over the past month," Morgan said. "Every motorist all over the country is feeling the same pain â¦ As soon as fuel prices increase, motorists fill up and speed off."
> 
> The price of 95 octane petrol sold in Gauteng rose to R9.96 a litre this month. On January 2 the price was set at R7.47 a litre.
> full story from Business Report here


From the same story, it seems petrol station owners are being hit with other problems too - not least of which is the increase in working capital that goes with these increases.

----------


## akhanna01

the way the crude prices are soaring tradinding currently @143$per barrel.there are no chance that opec will decide to increase the production as they are in the favour of such high crude prices rather they say that it should be at 200$ per barrel . so one expect in coming year petrol prices to gearing upwards.

----------


## Graeme

I have several times had to insist that the pump attendant zero the bowser before starting to put petrol in my car.  Have a good look at the reading on the bowser before you allow the attendant to start pumping.  Unlike the old bowsers which which used to zeroise the moment the hose nozzle was removed from the bowser prior to pumping, the new ones in use by Total and Engen seem to have to be zeroised by the attendant, and they don't always do that, which means that the figure showing on the face of the bowser is added to what is put into your car.

----------


## kernel32

> I have several times had to insist that the pump attendant zero the bowser before starting to put petrol in my car.  Have a good look at the reading on the bowser before you allow the attendant to start pumping.  Unlike the old bowsers which which used to zeroise the moment the hose nozzle was removed from the bowser prior to pumping, the new ones in use by Total and Engen seem to have to be zeroised by the attendant, and they don't always do that, which means that the figure showing on the face of the bowser is added to what is put into your car.


This is quite disturbing!  So they basically keep the amount that was showing on the display.  Makes me wonder why I always give them big tips?

----------


## Dave A

Some good news - The price of petrol is to go down by 45c a liter on Tuesday 5th November.  :Thumbup:

----------


## Chatmaster

That decrease seems pretty low though, I actually expected it to be way lower, but I am definitely not complaining!

----------


## IanF

> That decrease seems pretty low though, I actually expected it to be way lower, but I am definitely not complaining!


Chatmaster 
Here the link to *CEF* It gives the breakdown. 151 cents due to oil price and minus 105 due to exchange rate. So talk up the Rand and we can another R1 off  the price. :Cool:

----------

Chatmaster (01-Nov-08)

----------


## Dave A

It's a bit of a mixed blessing. The crisis that helped weaken the Rand also brought down the oil price quite dramatically.

At least we were nett winners this time.

----------


## Dave A

Enjoy lower fuel prices while they last.



> Ministers for the Organisation of the Petroleum Exporting Countries (Opec) on Wednesday agreed to remove a record 2,2-million barrels per day (bpd) from oil markets in a race to balance supply with the world's rapidly crumbling demand for fuel. 
> 
> The 12 members of Opec were also aiming to build a floor under prices that have dropped more than $100 from a July peak above $147 a barrel.
> 
> The cut comes on top of existing reductions of two million bpd agreed by Opec at its last two meetings. 
> 
> Oil showed little reaction to the deal reached after four hours of talks, with prices trading just above $43 a barrel.
> 
> Saudi Arabia, the world's biggest oil exporter, has led by example -- reducing supplies to customers even before a cut has been agreed to help push prices back towards the $75 level Saudi King Abdullah has identified as "fair".
> full story from M&G here


Now I vaguely recall oil running at about $30 a barrel before the price run up really started. I know that was a few years ago, but that "reasonable goal" probably equates to about a 20% per annum increase.

----------


## duncan drennan

> Now I vaguely recall oil running at about $30 a barrel before the price run up really started. I know that was a few years ago, but that "reasonable goal" probably equates to about a 20% per annum increase.


I vaguely recall OPEC mentioning something like $40 as being a realistic price per barrel when it was pushing through $100. Apparently speculation was driving prices up. Unless my memory fails me  :Crazy:

----------


## Dave A

Bottom line - they've got used to the extra money. There is always this ratchet effect when it comes to price fluctuations  :No:

----------


## Dave A

> The retail price of petrol will decrease by between R1,34 and R1,37 a litre -- depending on the grade -- on Wednesday January 7, the Department of Minerals and Energy announced on Friday. 
> 
> This follows a drop of R1,61 a litre last month and 45 cents the previous month.
> full story from M&G here


Woot!

----------


## Loman

One problem still remains - petrol & diesel use has a bad affect on our environment. 

What happened to that TATA compressed air minivan that was supposed to be released in south africa in 2008??

----------


## garthu

I like the reference to "ratchet effect". Whats done is done! Speaking to our domestic and guys at work, the taxis etc will not drop the rates (even though they are the first to put up when it goes up). Retailers probably won't drop either, more profit for a change.. Maybe the powers that be will be a bit forceful though, being an election year all n' all!

----------


## duncan drennan

> I like the reference to "ratchet effect".


Everyone who negotiated pay raises way above the expected CPIX levels helped to entrench inflation. Also, you have to consider that there is a delay time between lower fuel prices impacting on food prices - crops were planted while diesel prices where high, and that cost will carry through the season until the next harvest.

----------


## Dave A

The art is to claim lag just long enough for everyone to forget that the price should have gone backwards a bit  :Stick Out Tongue: 

It's all just a shift in relative value anyway and who wants to go backwards?

----------


## Dave A

Here's a classic example of the ratchet effect.



> EASTERN and Southern Cape motorists and taxi and bus commuters, who hope they may benefit from last nightâs fuel price drop â down a dramatic R4 a litre compared with last July â will be sorely disappointed as they are unlikely to feel any relief in their pockets.
> 
> Food shops, airlines, bus and taxi operators told The Herald yesterday that the petrol price cut â down R1,35/l at midnight last night â would have no immediate effect for motorists or public transport users.
> 
> Cosatu said this week it would consider putting pressure on taxi associations to review their fares. âIf the price of fuel goes down, taxi fares should go down as well,â said spokesman Patrick Craven.
> 
> Last year, taxi associations joined hands with Cosatu in calling on the government to do something about the high fuel price which had risen to more than R10/l. But SA Taxi Council secretary general Philip Taaibosch was singing a different tune this week. âOur fare increases have never been motivated by petrol price increases,â he said.
> 
> Taaibosch would not be drawn to comment on what the R4/l decrease in the petrol price since July last year meant to taxi operators.
> ...


Although in fairness, who knows how long current fuel price levels will last anyway.

----------


## Frankincense

True D, I don't think this reduction in fuel price matches the catastrophic events occuring globally(The "lag" you speak of is evident - reactionery,  developing eco's are always behind) and oil is now back over the $50 a barrel, blaming Ukraine non-compliance and WWIII (Isreal and Hammas)... good prices shouldn't last long, then back up on the $140 a barrel...or worse...no oil....

----------


## Dave A

> On 7 January 2009, the price of petrol dropped by 134c – 137c a litre, depending on the grade. This comes on top of a 161c cut in December and a 45c cut in November 2008. All in all, to fill up a 60 litre tank will cost about R200 less in January 2009 than it did in early November 2008. (The Times, The Wheel Deal, 3 January 2009)


Just loving it!

----------

