The Department of Energy announced that the petrol price (95 ULP) will decline by a further R1.74/l, with effect from Wednesday, 6 May 2020. The latest announcement means that the price of 95 Octane (LRP, Gauteng) will now cost R12.22 per litre, which is the lowest oil price in South Africa since September 2016. In addition, the price of diesel will fall by around R1.56/l, the cost of Paraffin will drop by R2.97/l (retail price), and the gas price will decline by R2.62/kg.
The latest decrease in the petrol price, once again, reflects the sharply lower international product price (largely as a result of the slump in the international oil price) over the past month. Over the past year, the prices of petrol will have declined by almost 27%.
A breakdown of the R1.74/l reduction in the prices reveals that, on its own, the decline in the international product price (oil price) would have resulted in the SA prices of petrol declining by R2.06/l on 6 May.
The latest fuel price decline will provide another very welcome boost to households and the business sector, once the Covid-19 lock-down ends.
This should encourage the Reserve Bank to consider a further cut in interest rates. Since the beginning of 2020, the SA Repo rate has fallen by a very welcome 2.25 percentage points. Of course, the benefit of the lower petrol price as well as the sharp reduction in interest rates is being overridden by the current Covid-19 extended lockdown, but as mentioned above, the price of petrol reduction and interest rate cuts could help to revitalise the SA economy once the virus is under control and the lockdown measures are more extensively lifted.
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