By John Kankolong
The Ministry of Mines and Energy has announced that the nation need not worry about a possible increase in price on petrol and diesel.
“During the review period, the average rand/US dollar exchange rate depreciated whereby the US dollar depreciated against the rand for the month of September 2007,” reads a press statement.
The favourable exchange rate coupled with the sharp decline in crude oil prices from over US$81 to below US$80 per barrel, can explain the oil prices floating between US$81 and US$78 a barrel. This has contributed to the import parity being positively affected, leading to slight over-recoveries experienced in the local market on petrol grades while diesel price is under-recovering.
However, the international crude oil prices are expected to increase modestly over the next few months, even if the softening of the international crude oil prices is momentary.
These factors can be quoted as explanatory elements: the continued economic growth with most of the oil consuming countries such as China, United States, and India; the problems with the Kashiwaki-Kariwa nuclear power plant, expected to increase oil consumption in Japan through to mid-2008 and then low petrol products inventory world wide.
“The ministry of Mines and Energy will keep fuel prices at current levels despite the over-recovery experienced in the local market on petrol and diesel grades respectively” the press release reads.