Petrol and global threats

April 12, 2011 - 0:0

Right now, a lot of previously well-off countries are in deep trouble. Only a few years ago, Ireland was the blue-eyed boy of the European economy but now it’s being bailed out with unemployment rising and its citizens getting more despondent by the day.

The same applies to Greece and Portugal - both having had to be bailed out - with Spain looking like another possible contender.
In the UK, the Brits are being bushwhacked with a raft of drastic economic measures that will hit their pockets so hard they'll feel it in their feet.
The United States economy is wallowing about like a drunken dinosaur and in the middle-East, dictators are being toppled right, left and centre as ordinary people get so fed up with being stuffed around by their governments they're prepared to die trying to change things.
Here in South Africa, protests against poor service delivery are becoming more widespread and much as the government tries to help the poor, the gap between rich and poor is widening. And, in spite of denials from supermarkets, food prices are going faster than a ground to air missile. Just talk to someone who is poor and you will be told just how difficult it is feeding a family these days.
Even rich people are beginning to seriously complain about price increases.
And one of the major causes of food inflation has got to be the petrol price - which has now rising to the point where it costs round about R10 a litre.
-------------Government taxes
South Africa is facing the same problem as most European countries and especially the UK.
Which is quite simply that the bulk of that R10 it costs to put a litre of petrol in your car is made up of government taxes.
It seems to me that governments are caught up in some sort of petrol price vortex where they simply cannot afford to reduce taxes because they depend on them so much and have to keep jacking them up to make ends meet.
Sure, we are all at the mercy of exchange rates and crude oil prices and frankly I don't know quite what the government can do about it.
But, what I do know is that it can't go on like this.
Because every time there is a petrol price increase the domino affect means that everything imaginable has to go up in price from food to industrial materials that have to be delivered by road or rail. Not to mention taxi fares.
Already we have seen the UK government having to back down on petrol price increases because of threatened protest action.
----------Simply unsustainable
Even in the United States, where petrol has been as cheap as dirt for decades, consumers are beginning to complain bitterly about how much their gasoline is costing these days.
Right now, we in South Africa are lucky that our rand is strong compared to the dollar which is the international oil currency of choice.
But, just imagine if our exchange rate was around about R8 or R9 to the dollar and the Middle East conflicts drove oil prices up to the peak they reached a few years ago?
Can South Africa survive on a petrol price of R12 or R15 a litre?
The fuel situation in South Africa is a cancer just waiting to cripple our economy. It is simply unsustainable.
Quite apart from which the whole system here is ludicrous. I drive a diesel vehicle and because diesel is ""unregulated"" one of my local service stations has a permanent offer of a discount of 20c per litre on the going price in the neighborhood.
----------No discounts
That 20c saves me something like R1 000 a year.
But, petrol can't be discounted.
Of course, the minute you talk about discounting petrol - as Pick n Pay has done for years - you get shouted down by the fuel industry. They yell blue murder about having to survive on minimal profits which might well be true.
They will also say that discounting petrol will lead to job losses particularly by fuel attendants on the forecourt.
The problem is that if government continues to protect the fuel prices and not allow the likes of Pick n Pay to discount, the job losses through food inflation alone will cause far more job losses than discounting.
-----------Cannot go on like this
But, discounting does depend on volumes and right now there are far too many petrol stations in this country for anyone to have reasonable volumes.
This is something else I cannot understand - is there is a country in the world that has as many petrol stations as we do given our car population?
Something, I reckon, has got to give with the whole petrol price situation. It just cannot go on like this. It is a cancer that is being treated with a band-aid and a pat on the head and it is going to bite us one day. Badly.