The good news is that South Africa's energy infrastructure, including home heating, is largely produced through hydro-electric sources. Many poor people though, continue to purchase paraffin for heating and lighting, and this will soon no longer be affordable.
Furthermore initiatives like Sasol and Cape gas exploration initiatives will mitigate some of the effects. What remains though are our own massive fleets of vehicles that drink nothing but petrochemicals. It's global transport infrastructures that stand at the root of our dilemma, and the suburbs and cities that function along these arteries of energy.
High fuel costs will especially hurt the vulnerable open economies of large countries, with cities separated by hundreds of kilometres. This means Australia, South Africa and the USA. Desert cities like Alice Springs and Tannant Creek in Australia, and Phoenix and Las Vegas (currently booming, and the fastest growing American cities) will become the quickest to wheither, as long haul truck companies pass on the mounting fuel price shock. South African towns like Beautfort West, and Kimberley, that are essentially large water-deprived transport hubs, will also struggle. Remote Desert states like Namibia, Ethiopia, Bolivia, Chile, Tibet, and Pakistan will bear the brunt of the crisis, as these countries are dependent on food being hauled through vast deserts or difficult terrain.
Gold will reach its zenith, which will do well to offset what would otherwise usher in a more severe currency crisis for South Africa's Rand. Companies in South Africa like SASOL will do superbly well over the next few years (their business is the synthesis of oil from coal), and public railroads, companies like TRANSNET, will become more important than they are today. ESKOM, South Africa's (and in fact Africa's) enormous energy utility, will become an even more sought after company, and it may well continue to expand its wind turbine, and nuclear facilities further into Africa. Hydro electricity is at 100% capacity even in many developing countries.
The excesses of our era will be regarded by the generation that follows as both vulgar, and stupidly short sighted. They will look on the Cheap Oil Era as we regard the hippie era of the 60's - with a certain amount of nostalgia and contempt.
But the bottom line is that the era for growth for South Africa, and the world, ought to come to an end next year (2006) and end forever. It's unlikely that we'll see these ludicrous levels of meaningless, valueless consumption or environmental destruction (other than through nuclear holocaust) ever again. There is some comfort in that. But that's likely to be all comfort to be had in the increasingly uncomfortable world that's coming.
From Bizcommunity.com:
South Africa's economy, with a more fairly valued Rand, low inflation rate, higher growth path and increased consumer spending is enjoying one of its most healthy periods for many years. This was the message from Rudolf Gouws, Chief Economist for Rand Merchant Bank at the seventh Consumer Goods Council/Efficient Consumer Response conference in Sandton.
Gouws says: "We have entered a new era of lower inflation and higher economic growth. Growth is being driven by fixed investment which is one of the most positive indicators of a healthy economy."
Business confidence, he claimed, was at a 23-year high: "We are seeing the longest recorded economic upswing that will move along a fairly horizontal band underpinning the private sector investment we are experiencing."
The data also indicates that in terms of job creation, South Africa is breaking into positive terrain.
Gouws notes that the strong growth rate displayed by consumer spending would slow down during 2006: "The consumer confidence index indicates historic highs, and it is this confidence that is driving spending."
He cautioned, however, that much of this spending is funded by credit and will be one of the factors expected to slow down consumer spending.
Interest rates might possibly experience a slight rise in 2006: "We do not expect the rand to rise more and there will be no repeat of major import price windfalls."
The recent strength of the Rand is attributed to the Dollar (US) weakness and will continue to level out with considerably less volatility Gouws claims.
Global oil prices and a more competitive Rand would lead to higher domestic fuel prices. However he stressed that the Reserve Bank had stated clearly that it was committed to ensure that gains against inflation would not be forfeited and that its monetary policy would not allow fuel prices to develop into an inflationary spiral.
No comments:
Post a Comment