Filling up on your credit card

The Department of Minerals and Energy has published draft regulations for comment on changing the law to allow petrol purchases with credit cards. If you wanna respond then you gotta write it down and send it in before the 30th of May 2009. Previously it has been illegal to pay for petrol with a regular credit card. This is due to petrol prices being set by government and the cost of using a card is carried by retailers and credit card holders get benefits from their cards. This amounts to a discount for consumers or a burden for retailers which would skew the pricing as established by Government. Now the Government want to open it up for the World Cup 2010. So if they do what should you do?

• Compare your Credit Cards
• Plan your Budget
• Don't go overboard

The draft regulation contains this clause: 'The costs to a retailer arising from the acceptance of payment in the form of debit, credit and hybrid cards must not exceed the costs of cash as a form of payment determined by the Department of Minerals and Energy on an annual basis'. The difficulty here is that the cost of paying via a credit card will have to be picked up by someone. If the petrol stations are not supposed to pay over the cost of cash will the banks meet this and allow free transactions on petrol purchases? This seems highly unlikely.

Further the Petro card setup we have at the moment charges interest on all purchases from time of purchase rather than allowing an interest free period like most regular credit cards have. Would this continue or would the banks extend the interest free period to fuel purchases and could this then be used to offset the transaction cost that the proposed law stipulates is to not be more than the cash cost? The commentary period is almost over so if you want to have your say write it down and send it to the Department. This law could change how you budget for petrol and have long reaching effects so get involved.

Petrol running out

Petrol stations are apparently starting to run out of product.

The petrol and diesel that keeps cars and trucks on the road.

Well somebody has to take it to the petrol station and fill the station up before they can fill you up.

And at the moment they just can't get all the fuel to the pump.

This is due to the ongoing strike action by South African Transport and Allied Workers' Union (Satawu).

This story was covered by the Mail and Guardian who interviewed Reggie Sibiya the chief executive of the South African Fuel Retailers' Association (FRA) on the effects that this strike may have on fuel supplies.

So far there has been enough but it was believed that if the strike continued for much beyond Tuesday then there might be shortages.

As it stands the strike is still ongoing and it is not known if the sides have negotiated a settlement with each other.

Creamers Engineering News looked at the story and reported that there was a last minute intervention with the CCMA, which failed, last Tuesday evening.

The RFA has stated that they will make use of non unionised drivers to get the deliveries made, but this carries the risk for those drivers of being intimidated or even attacked for breaking the picket line.

Satawu said that they could not reach agreement on a number of issues including 'minimum wages, allowances and maternity leave, among others'.

The Road Freight Employers Association hit back that they believed that Satawu were 'not taking the current economic climate into account in its demands for wage increases' and that the union demands were in their opinion 'excessive in the extreme'.

In labour disputes as is when counting the casualties of war the actual truth of the matter is very rarely actually explicitly called for what it is.

The one side will cry one thing while the other will cry the opposite somewhere in between both these viewpoints lies the truth, which hopefully can be negotiated to.

Newstoday.co.za also looked at this story and noted that 300 petrol stations have run dry across the country already and that if the strike is not concluded this will continue.

There is currently a backlog of deliveries to be made and the parties are continuing to meet today to try and resolve their differences.

So if you feel like offering your two cents to either of the parties involved, Satawu can be contacted here and the Road Freight Association can be contacted here. They were in meetings with each other as of eleven this morning.

Let's hope that they can come to an agreement and that everybody gets to walk or drive away happy.

In the meantime register with Justmoney.co.za stay on top of your personal finance and wait till you can drive your car again.

Petrol price expected to rise

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Petrol price going up again

The petrol price in South Africa is a tightly controlled commodity.

We have a bunch of bureaucrats whose sole task is to administer the price of petrol.

This is done via a complicated mechanism that is explained more fully on their website, but is designed to balance out the vagaries of international currency fluctuations and to take into account the various other logistic and production factors involved in getting the fuel to the pump.

This means that observers of the petrol price can start to make pretty accurate guesses as to which way it is going to move from month to month.

The last few movements have been in the way of a price cut, but this next round in February is expected to lead to a price rise.

The Mail and Guardian looked at this story and interviewed an expert on the petrol price fluctuations. This expert was of the opinion that the price would rise and that given the movements in the market that have been seen this month that the rise in the price of petrol would be between 30 and 50 cents.

Diesel, however, was not expected to rise.

'This is because of the actual demand for diesel falling sharply as it's important for industry and industry has slowed down'.

Business Day also looked at the issue of the expected petrol price rises. The daily recovery fund has been under recovered to around 42 cents per litre.

'An under recovery happens when consumers pay too little for fuel products on a particular day, and an over recovery is when too much is paid'.

This has in part been fuelled by the weaker Rand and by extension a change in the price of oil is reflected and magnified by our weaker currency.

Diesel products were also reported as not being expected to rise in price. This was due to other factors in involved in pricing diesel, one of which was demand, which has fallen as a consequence of the global financial crisis, as manufacturing outputs decline.

Another economist interviewed in the article felt that we had seen the last of the large petrol price increases for the year as both the Rand and the price of oil were expected to recover leading to the two effectively balancing each other out.

iAfrica also carried this story adding that the prediction for the price of oil, at the end of 2009, would be either $40 a barrel or $80 a barrel, the discrepancy between these two figures shows the demand price difference between a 'growing' economy and the situation we are in now, where deflation is a factor.

The $80 a barrel price would only happen if the US manages to kick start its economy.

Business Day further reported that Asian oil prices rose slightly on expectations of the economic stimulus packages that are being crafted in an attempt to prop up demand and bolster production.

There have been worldwide decisions to lower interest rates and to increase government spending in order to get the worlds economy out of crisis.

Justmoney knows that things will get better, but while times are tough reckons that it would be better to get a nice safe savings account, keep a really beady eye on your budget and wait until the markets have calmed down and found their stability again.

Downturn fuels car makers' worries

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Downturn fuels car makers' worries

Globally car manufacturers are starting to feel the full effects of the credit crunch with less new cars being sold.

The Mail and Guardian reports that at the worlds biggest car show, The North American International Auto Show, sales are not looking good for the rest of the year, and companies that are the beneficiaries of huge bailout are still under pressure and struggling to survive.

As one attendee put it 'I have seen a better mood at funerals'.

Apparently the only things causing any sort of buzz and hype, were green and electric related technologies. There were demonstrations outside by disgruntled employees who have lost their jobs, despite the bailouts.

In South Africa the Dispatch reports that according to the National Association of Automobile Manufacturers of South Africa (Naamsa) new vehicle sales are expected to show an improvement in the back half of 2009. However due to the state of the economy globally, exports of vehicles and components are expected to remain depressed. Exports to other African countries were expected to improve marginally. Naamsa released figures that showed a 27.1% drop in new vehicle sales for December 2008 compared to December 2007.

Business Report tells us that it is not that bad for everyone though. VW the German car manufacturer set a sales record last year and managed to expand its market share regardless of the current economic troubles.

As they put it 'This shows that our group's multi-brand strategy is paying off and our young and attractive model range is popular with customers all over the world.'

A lot of the American car makers problems seem to spring from a lack of adaptivity and a general ignorance about where the rest of the world wants to go. Those massive gas guzzling monsters that may go down in Nowheresville, Idaho, just won't cut it on the streets of Munich.

In August VW had overtaken Ford to become the world's third largest auto manufacturer after GM and Toyota. Fin24 also followed this story.

Business Day came in with a story about McCarthy Motor Holdings, who said that they are feeling the effects of the crisis and will be closing 28 dealerships in the first quarter of this year. They said the cause for this was soft demand and high associated costs. They also said that this was the worst downturn that they could remember. The trend before the crash was for massive investment in the industry with an expectation of it growing further, however now there is an oversupply of dealerships and some are starting to close down.

New vehicles are not expected to drive this market and dealerships are swapping their focus over to the used car market.

Justmoney says if you want another car, rather than spend too much why not get car finance for a second hand car, or one that does not use as much petrol or cost as much to run?

The new car market might pick up at the end of the year, so if you really want a snazzy new car, get a savings account now, save up your deposit and buy your self an end of year present later.

Petrol price cut not as it seems

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Petrol price cut not as it seems

The Fuel price goes down tonight at midnight.

However there have been changes made to the zones that fuel is distributed in, so you may not get the price cut that you were expecting.

The South African Petroleum Industry Association (Sapia) said yesterday that there had been significant changes to the zone differentials across all areas.

This is basically how much it costs to get fuel from the point it arrives in South Africa to the point where you fill up. These costs are specific to your area and will differ across the country depending on local fuel transport factors.

The Mail and Guardian explains all of these concepts more fully and also notes that in order to know what sort of price cut you will get you would need to consult the Government Gazette to do this. The Government Gazette is not easily accessible, with companies even charging subscriptions for you to see what should be publicly available information.

Business Day also followed this story stating that the price of fuel will drop tonight but it will drop by less than the figures given by the Department of Minerals and Energy after the review of existing fuel zones. SAPIA is currently not displaying these zones on their website, although there is a link there for them.

A spokesperson for Engen said that the magisterial pricing zones that existed are no longer reflective of the real costs involved in getting fuel to pumps. Engen met with the minister regarding one of their refineries in December.

The Department of Minerals and Energy lists the zones, but does not relate them to geographic areas on their website. They do however provide a breakdown of the various cost inputs in determining the price of petrol. This can be found here.

Business Day also noted that while the fall in the price of crude oil is good for the consumer with these price cuts being passed on by the government, oil companies were suffering with the massive drop in the price of crude oil. SASOL was quoted as such: 'Sasol chief financial officer Christine Ramon said that "for budgeting and forecasting purposes", Sasol estimated that for every $1 a barrel increase in the annual average crude oil price, Sasol's operating profit for the current financial year would increase by about $51m'. Oil companies make massive profits as can be seen from this quote.

In a human interest side to the story iAfrica interviewed a number of consumers as to how they expected the fuel price cut to affect them, with most coming in on the side of it making a huge difference to their lives.

Justmoney hopes that the fuel price continues to come down and that more money will be put in the pocket of the consumer this year.

However like we always say, get a savings account and do a budget. Then at least you will know what benefits you can get, and have a little nest egg, to buffer you if things go wrong.

Petrol price bonanza

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Petrol price bonanza

It's the New Year and good tidings are to be found.

The petrol price is going down again on Wednesday the 7th of January 2009.

The price cut will be between R 1.34 and R 1.37 a litre depending on what type of fuel it is.

This is what the papers had to say about it.

The Mail and Guardian called it in with the headline 'New Year cheer as petrol price set to drop'. They noted the previous drops in the petrol price that occurred last month and the month before. One of the major reasons for the drop is the strengthening of the average Rand / Dollar exchange rate over the period.

Business Day reckoned that we are set to benefit from more price cuts as the global price of oil is expected to be under pressure for at least the next six months. Growth in emerging markets, as they start to come right again after the Western crash, will drive an increase in oil prices, when it happens. The Fuel Retailers Association head was quoted as such 'As you know, our retail margin is fixed in cents a litre. So when the price goes down, people buy more petrol, which is good for us. On the other hand, when the fuel price goes up, people cannot afford to buy more and our margins come under pressure'.

The Times followed through on this angle, going more in depth into the issues surrounding the position of petrol stations at the moment. Petrol stations are under pressure and the margins are very small, some have gone out of business while others have diversified into retailing and complementary products in order to survive. The article finished with a breakdown of where the price cut has come from. 'The latest price cut can be broken down into 82.87c a litre for cheaper oil, 6.83c a litre due to the rand strengthening against the dollar, and cutting the 44.85c a litre "slate levy" to zero'.

Business Report called the cut a New Year's gift from the government and detailed the various fuels that will be affected by the new pricing regime. Diesel would drop by 167.95 cents per litre and illuminating paraffin would drop by 131.3 cents a litre.

iAfrica carried a brief update on all the prices.

The other major story out there today is the state of the economy and what we can expect this year.

Business Day carried a piece that held out for an optimistic outlook for 2009, but wanted to see how traders would feel after they returned from their holidays. They were also waiting to see what the ANC election manifesto would promise as it would outline if there were to be any changes to economic policy.

Business Report carried opinion that we would avoid another Great Depression as the effects would be balanced out by further strong growth in Asia.

The Dispatch looked at how a globalised supply chain would be able to spread the comeback and pull us out of this economic hole quicker than expected.

The Times called it a tough year ahead but reckoned we can survive. Their major issue was how our economic policy would stand up to the political pressures it is expected to face.

Justmoney says that in the face of uncertainty get a savings account, do your budget and just wait and see.