THE THREAT of rising fuel prices has been somewhat lessened as international crude oil prices began to crack towards the end of March.
Controlled production cut-backs by members of Opec (Organisation of Petroleum Exporting Countries) have seen the price of oil trebling in the past year. But the indicator price of Brent crude fell from over US$30 a barrel to US$27.4 at the mid-point of the month, and saw Opec spokesmen suggesting to the International Petroleum Exchange in London that US$23-US$24 a barrel would be their preferred longer-term price.
This is a precursor to this week's Opec meeting at which the year-long cuts in production are being discussed. This in an atmosphere of increasing international political pressure on the Opec producers, and with the US$30 oil price of recent weeks being threatened by market forces.
Certain members of Opec obviously realise that these ultra-high prices are just not sustainable, said Andrew Banks, petroleum manager of national airline, SAA. US$22-US$24 is very realistic - certainly in the 3rd and 4th quarters of the year.
But, Banks added, US$16-US$20 is a more acceptable price level. There is a very fine balance, he said. If the price goes too high, demand starts dropping; refineries are forced to close; and exploration is put on hold.
All the market research by the multi-national oil companies points to this price range being sustainable, and this is what they are doing their forward selling at.
But, while oil prices might continue to ease, there is a lag before the pump prices for all the fuel categories can also ease. Some five to six weeks, said Banks, implying that it would be end-April before the users see a drop in their fuel bills.
In the interim, a further, substantial increase in pump prices is still likely, as the high oil price of recent weeks filters through.
For road users this will come from the serious under-recovery in the petrol/diesel pricing formula - which started the March audit period at an average of -25.1 cents a litre for petrol. This, say economists, indicates that the April 5 price rise is likely to be anything up to 30c/l.
But, longer-term, things look like stabilising at a less threatening level.
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