The Department of Mineral Resources and Energy has announced that 95 octane petrol will decrease by R1,02 while 93 octane petrol will decrease by 89 cents. 

The price of paraffin will go down by 82 cents per litre. However, the price of diesel will increase by 10 to 15 cents, depending on the grade. 

Analysts say the difference in the prices of diesel and petrol boils down to supply and demand. There is a high demand for diesel due to the high demand for electricity generation.

The department’s Robert Maake, in an interview with SABC, says the main reason for these adjustments is the lower oil prices, which led to lower prices of all petroleum products. 

"Unfortunately, the weaker rand against the US dollar took away 57 cents per liter on petrol and over 70 cents on diesel," he adds. 

ALSO READ: Another petrol price drop predicted 

The Central Energy Fund (CEF) predicted in mid-September that both grades of petrol would fall by R1.97 per litre, while diesel would rise by at least 54 cents. 

The month of September also saw the petrol price decrease by R2.04 per litre for both grades after motorists had been experiencing pressing price hikes in the previous months. 

An economist from the North West University (NWU), Waldo Krugell, previously explained the factors which play a role in determining the increase or decrease of the petrol price in the country, and that the main factor that made the petrol price drop was the decline in international oil prices. 

"The two main drivers are the price of crude oil and the rand/dollar exchange rate. The price of crude oil decreased in August but unfortunately the rand/dollar exchange rate has also been down in August, meaning our savings could have been higher had the rand been stronger against the dollar." 

Although the rand/dollar exchange rate was down in August, it still favoured the petrol price, which is good news for South Africans. 

"For ordinary households, it means your fuel spending is going to be less and you can use the money for other necessities. It is also a good thing for inflation - if there is an increase in transport costs, it makes other products more expensive. That pressure has now been lifted," explained Krugell. 

ALSO READ: Fuel price drop a relief

At the time, the diesel price also decreased with the petrol price by 56 cents. Economist and senior lecturer at the University of the Free State (UFS), Arno van Niekerk, has also shared the same sentiments as Krugell—that the petrol price drop will go a long way as far as people’s budgets are concerned.

"One of the things that will be significantly impacted is inflation, as the fuel price does not only impact motorists, it also has a knock-on effect on the entire economy. It is not just motorists paying more, it is also the impact of cost on production, from farming to transport to different sectors in the economy."

OFM News