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]

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

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.

[Dave A]

Of course there is an alternative - electric cars.

Yep - just plug them into the wall and recharge them between load-shedding episodes

[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 … 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]

Petrol price increase

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]

At the bowser

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.