Sat Oct 22 03:49:50 CAT 2016

Motorists can breathe easy as petrol price falls

By unknown | Sep 03, 2007 | COMMENTS [ 0 ]

Robert Laing

Robert Laing

Petrol will get 10c a litre cheaper at midnight tomorrow while diesel goes up 5c a litre.

This brings the price of 93 octane commonly used inland down to R6,78 and 95 octane used at the coast to R6,67. September's petrol cut means prices have dropped 33c since June.

Government sets the retail price of petrol and the wholesale price of diesel. This means service stations have some leeway to compete by narrowing their profit margin on diesel, but all are forced to sell petrol at the same price.

Since petrol costs the same at all garages, motorists tend to view it as a commodity.

The fuel companies argue this perception is unfair because the different petrol brands differentiate themselves with additives.

For instance, Total claims cars get better mileage from its new Evolution petrol brand. In its home market in France, Total sells Evolution as a premium brand.

Its South African operation cannot follow suite because government price fixing only allows price differentiation according to octane level and whether it is sold inland, or at the coast.

One of the side-effects of government price fixing is the tendency of South Africans to waste money on high octane petrol. For instance, cheaper 93 octane is the correct petrol for Gauteng. But inland garages prefer selling 95 octane since it's more expensive.

Similarly, though most drivers should be filling up with environmentally friendly unleaded petrol, garages sell more lead replacement petrol.

Government's price fixers don't differentiate between unleaded and lead replacement and the fuel chains prefer to pump whichever is cheaper to make.


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