The general narrative behind fuel price volatility is convoluted, yet typical from a consumer point of view. Today, and tomorrow may bring long queues to petrol stations, where drivers will spend an additional few minutes, or hours to fill up ahead of the upward pressure. A friend of mine reminded me how much of the full tank would actually save your pocket if you’re pumping under 60l of fuel until the next hike or dip. I recalled how many litres practically disappear in the start and stop congestion slime surrounding metros lately. There are some interesting driving tips to lower fuel consumption. That’s probably how much one is saving from this whole tanking business lately — I don’t know, not doing the math (yet). There is however a bigger dynamic going on here, could someone read the first few chapters of Stiglitz’s ‘Free Falling’ book and remind me of the fuel price dip he compares around the global financial crisis in 2007–2009<! Something tells me our current prices are luxurious in nominal terms.
This week jet fuel prices seemed to have dipped by 2.6% or something like that — which is absolutely relieving (okay marginally). In a few months, a few additional thousand barrels of fuel will be coming out of Nigeria’s ocean horizons. Somewhere in between, some petroleum companies may drown in some type of protest action due to equity access issues — and in the medium term environmental pressure groups will be kicking in harder than ever before. While the composition of the fuel price in South Africa is an interesting conversation, with the Road Accident Fund stepping between a non-commensurate bill (2017 amendment) and upward pressure on the petroleum sector (something about this on 702 from Mr Sigogo)— equity complexities: paying more for less.
The only reason why the storyline has not gained any real momentum in my psychie yet is because the system wide dynamics are yet to kick-in, and the carbon-emissions taxation and incentive markets are yet to manifest themselves. Oh and the massive innovations in fuel pricing and energy juggling are yet to surface as hot topics!
In my email to Tehilla Niselow a few weeks back, my focus was really on how consumers should react, and what the cost pressures may do in addition to the Value Added Tax dynamics (and some other interesting things). Obviously ring-fencing the fuel levy for public transport investment is supposed to happen — but we can’t tell if it is happening yet (probably need a media statement from National Treasury). Nevertheless, deep research on the global emissions reserves have lead me to notice something rather startling: while Africa sits to be hardest hit by climate change due to the high cost of resilience (i.e. reviving towns and homesteads after floods), it has contributed very little since the industrial revolution.
Personally, I am facinated by what is happening in the Global South in terms of introducing sustainable solutions through electrification — the rest is just not innovative yet. Most of the lowest income countries have had the lowest carbon footprint commensurate to the lagging industrial and commercial activity. Instead of pressing on fuel, I can sense a lurch toward understanding a deeper issue: the cost and value trade-off in development. African states and many Global South spaces have massive emissions reserves to exploit, while the largest polluters purport expensive short-term pressure on greening in these spaces. I’ve seen this somewhere on my twitter feed actually: ‘public transport, walking, cycling: all these modes are used by black people due to a genuine lack of access’. I could turn ‘black’ into any native anywhere who is witnessing the growth in private car ownership and use in their respective spaces. If you heard Mr Sigogo’s interview on 702 you’d be asking some hard questions too at this point.
I’ve seen this somewhere on my twitter feed actually: ‘public transport, walking, cycling: all these modes are used by black people due to a genuine lack of access’.
Fuel prices going up may well be a tough spot for everyone, but the other side of the coin is not as dark as nor sticky. I just read the Business Day, and the transfer of complex skills in Nigeria seems to be a cool thing — maybe better if it was through the production of solar panel technology. More and more small businesses are entering the energy sector — some through owning or leasing petrol stations, or finding ways into the Independent Energy Production spaces through the PSPF. Capital asset gains, and abstract local losses through vanishing community benefits while nations benefit — are scary. In the same breath, petroleum is making African billioniares and enabling new industries access to capital that may have otherwise taken an imported form, dialect and opportunity assessment. At the same time I always think about Ken Saro-Wiwa, he was not in the business of leaching the planet but saving his community. Does petroleum do both? Not really, but it seems to be part of some dirty process of cleaning things up. Maybe there are other reasons why this monthly petroleum press is not exciting me. Maybe I just expect the complexities of this issue to be explored.
I found this one study that practically suggests that higher fuel costs change how people drive, and impacts on lower traffic accidents. This was in the USA, I honestly can’t tell if its plausible to say that now that the private car tank is full, 45% of the travel market will drive better and more cautiously. With automated driving kicking in South Africa by October through the Mobility Centre for Africa, a completely new set of questions need to be asked as part of the Road Accident Fund Bill inquiry (hint) — after what happened with Uber, Tesla and all. Nevertheless, driver behaviour and macro-costing are obvious spaces for economists really, I want opportunities. The point of this messy piece is to sort of argue that pressing on the fuel price subject just from one side feels wasteful — it’s rather useless lately because people know how complex the world is. So I’ve found some interesting questions for the wealth headed out there:
What would happen if energy depended directly on nature between biofuels (an agricultural product) and solar energy? What would insurance look like as climate change takes a toll? I just heard Dini Nondumo break it down, and all I see is volatility and opportunities for a new energy market.