Petrol, diesel and electricity: An energy crisis and economic disaster
4 July 2022
South Africa's energy crisis is turning into an economic disaster. At present, South Africans are dependent on electricity, which is not available, and liquid fuel, which is not affordable, for survival.
In addition, the households and businesses that increasingly rely on liquid fuel to meet their energy demands are also expected to pay fuel levies that are actually imposed specifically for road users.
Amid stage 6 load shedding, citizens got the news today that the price of petrol and diesel is once again increasing sharply this month: Petrol with up to R2,57 and diesel with R2,30 per litre. Nearly all petroleum products will cost more than R25 per litre from now on.
Although a country's economy is usually measured in terms of monetary value, energy consumption is a more accurate indication thereof. The fluctuating value of currency makes it difficult to determine exactly how much economic activity is represented by a certain amount of Rand or Dollar.
In contrast, the amount of Megajoule energy consumed correlates directly to such activity.
In South Africa, prosperous households, agriculture, industry, trade and railway transport were basically completely electrified by the 1980s. So, nearly every single citizen is affected by load shedding.
Nearly sixty percent of the country's liquid fuel is imported at this stage. The country's economy is, therefore, increasingly affected by international factors and the decreasing capacity of our ports.
As if that is not enough, thousands of generators are powered by petrol and diesel.
There is, however, a small part of the economy that can carry on with the least bit of disruption:
They are the households and businesses that have already liberated themselves of conventional energy sources. And it not only entails solar power and battery systems, but also electric transport.
The government can make a valuable contribution to ensuring that the current crisis does not turn into a complete disaster: It can do so by abolishing all levies on the fuel price and by opening up the market for renewable energy supply – save for safety regulations.
Based on the current trajectory, government is going to have to take out very large loans in the foreseeable future to help the economy recover. Abolishing the fuel levy should not be seen as a loss for the state coffers, but rather as a way to provide liquidity to the economy.
Opening up the energy market could make it more attractive for households and businesses to exploit renewable resources in such a way that power supply is optimised during peak times. It could also help to maintain the country's power grid.
Energy supply in South Africa – and, by implication, the country's economy – can no longer afford to have the ANC government in power.
It may feel as if 2024 is still a long way off, but a crisis of this magnitude could easily force a government to step down and, thus, necessitate elections. Otherwise, South Africans will just have to wait for things to get better.
Issued by Wynand Boshoff, FF Plus MP and chief spokesperson: Mineral Resources and Energy, 4 July 2022
