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As economists predicted, consumers can expect relief at the pumps as fuel prices to drop

The Department of Mineral Resources and Energy (DMRE) has announced that fuel prices will decrease from tomorrow.

A motorist uses a fuel pump to fill an automobile with unleaded fuel. File Picture: Dave Thompson/Bloomberg.

Published Jan 4, 2022

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DURBAN - The Department of Mineral Resources and Energy (DMRE) has announced that fuel prices will decrease from tomorrow.

This comes after economists who spoke to The Mercury yesterday said they expected a drop in the price of petrol of about 70 cents a litre. A fuel price drop will come as a welcome relief for motorists after prices shot to record highs last year.

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In a statement late on Monday, the DMRE said, the fuel prices for January 2022 will be adjusted as follows:

– Petrol (both 93 ULP & LRP): Seventy-one cents per litre (71.00 c/l) decrease

– Petrol (both 95 ULP & LRP): Sixty-eight cents per litre (68.00 c/l) decrease

– Diesel (0.05% sulphur): Sixty-seven point eight cents per litre (67.80 c/l) decrease;

– Diesel (0.005% sulphur): Sixty-nine point eight cents per litre (69.80 c/l) decrease;

– Illuminating Paraffin (wholesale): Seventy-one cents per litre (71.00 c/l) decrease.

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– SMNRP for IP: Ninety-five cents per litre (95.00 c/l) decrease;

– Maximum LPGas Retail Price: Seventy cents per kilogram (70.00 c/kg) decrease;

The department said the fuel prices schedule for the different zones will be published today.

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Yesterday tax economist Professor Dilip Garach said that he expected a decrease of over 70 cents a litre for petrol. But he added that it was sad that such a price decrease was unlikely to be passed on to the consumer.

“The corporates push up prices of their commodities when the price of fuel goes up, blaming the increase in prices on higher transport costs, but when the price of fuel comes down, commodity prices on the shelf don’t. This is a serious flaw in the monthly fuel-pricing model adopted by the government.”

Professor Irrshad Kaseeram, deputy dean of research at the University of Zululand’s economics department, also had predicted a decrease in the petrol price owing to factors, including the decline in the oil product price internationally.

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“There have been calls for more transparency from the Department of Mineral Resources and Energy for a weekly release of overall prices instead of a monthly release,” he said.

“Fuel is an essential expense. When planning, a consumer always has to set aside an amount for fuel. So any relief will benefit the consumer. January is also the month that some consumers have to spend money on school fees, books and school uniforms,” he said.

“There should be an average food price decrease owing to the decrease in fuel, however it is unlikely we will see a decrease in taxi fares. The consumer will be able to benefit by being able to save money with a fuel reduction and allocate funds to urgent costs.”

Mike Schüssler, an economist at Economists.co.za, had also forecast a decrease yesterday.

“It will help inflation and provide a bit of relief to the consumer. The decrease won’t have a big impact on the interest rate and on food prices.

“Although this is some relief globally we are experiencing a supply chain disruption that is affecting the economy. There was a huge demand for oil internationally with buying from northern hemisphere countries, due to the winter months, leading to a better price for oil and an expected drop in the petrol price.

“We normally expect to see lower oil prices during the months of February to April.”

THE MERCURY

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