From next week we'll be paying 49 cents per litre more for petrol, half of it because of the import price of oil and half of it in new taxes. And that's before the next round of depreciation of the rand, which will follow as our exports become increasingly uncompetitive – thanks to giant leaps in energy prices.
If you take the pessimistic view – and we’re being rapidly converted to pessimism around here – there is no escape. Electricity prices will increase by at least a third every year for the next couple of years. That reduces the competitiveness of the economy in general and, everything else being equal, that devalues the rand. Which makes oil imports (and renewable energy hardware imports) more expensive. And that was before the Reserve Bank dropped interest rates and made SA less attractive to hot money.
Even worse, oil traders seem poised to push up the price of the raw stuff as soon as they get the right trigger. There is considerable production capacity ready to be brought online, and major oil producing countries have declared themselves happy with the current price of oil. That has held price rises in check, with a disconnect between signs of growing momentum in the global recovery and the oil price.
That may not last, however. On Wednesday, the oil price ticked upwards on indications of new growth in the USA, and downwards again on data showing Japan is in deep trouble. Now it is a race between those indicators, plus oil reserve data from all over the world. If traders get the sense that demand could jump quickly enough for supply to lag a little, there could be significant price moves.
None of this (not even the lack of Eskom generating capacity, which is bygones) is under South Africa’s control. Yet again we find our currency value, our inflation rate and our economic growth at the mercy of larger events. But at least we can moan and groan about it. It sure looks like our near future will provide us plenty of opportunities for that.
By Phillip de Wet