Deregulation of petrol price could see us paying more at the pump - economist
An economist says it's premature to consider reconfiguring the current fuel price model despite a recent pricing blunder by the Energy Department.
It was announced on Monday that both grades of petrol would go up by 81 cents a litre.
But on Wednesday, the department admitted there had been a miscalculation, saying the increase was overstated by six cents.
It has prompted calls for a review of the fuel price determination processes.
Economist Dawie Roodt says the department's error is unlikely to have a significant impact.
”But it does come at quite a bad stage for the department to miscalculate the petrol price at this stage because of the high petrol price.
“From now people will ask questions like is the petrol price correctly calculated or is it miscalculated again or not. But so far I am quite happy with the way it is calculated for many, many years. I think this was just a normal error.”
Roodt says the current fuel model not only serves a pricing purpose but also protects consumers from runaway costs.
”I think it is a relatively good model, although certain margins in the model, for example the wholesale margin, the slate levy and the repo margin, those margins can potentially be wrong in the model. The free market will determine what the correct margins are for those figures.
“But it is important to note that the correct margins might be higher than what the fuel price prescribes at the moment. Which means we could see an increase in many places if we decide to completely deregulate the petrol price.”