We can’t control the price of oil

Go ahead and blame the government for the high fuel price. It’s an easy target. Complain about the Guptas as the culture of looting. Curse Jacob Zuma and the horse he rode in on. We’re South African, complaining and queueing is what we do best. We also have another talent: we get on with it. It’s a South African who is taking man back to the moon (eventually). It’s a South African who lit the current electric mobility fire. He may not like it, but our boy Elon is still our boy.

Our boy’s current president Donald Trump broke the US from the Iran nuclear deal in May 2018 and sent the oil price soaring. We felt it as a R1 increase in the fuel price the next month, and the prices are continuing to rise.

The 2015 deal was put in place by the Obama administration, along with EU allies, to disarm Iran. It was also a low-risk way to include an Arab power in the fight against terrorism and to sink the price of oil to put some pressure on Russia in the wake of the Crimean annexation. Iranian oil extraction is of the cheapest on the planet and the 3-million barrel production capacity could easily pull the Brent price down to the magical $40 mark.

It worked and we enjoyed a couple years of cheap petrol. Then the Trump administration played its hand as Saudi allies. Excluding Iran from oil trade with, specifically, the EU, is great for Saudi Arabia because it causes a shortfall in global oil supply and drives up the price of oil. The Saudi economy is very dependant on the oil price.

I’m not saying that Trump pulled out of the nuclear deal to help his homies in the Middle East and, by extension, Russia. I am saying that the string of crippling fuel price increases – which will continue through the tail-end of 2018 – relate more to international relations than to our domestic failings. But by all means, keep heaping blame on the embattled ruling party if it makes you feel better. They can do better, like establishing a task team that ensures the Road Accident Fund levies are used correctly. We also need more transparency in economic decisions and policies.

Follow me, it will be alright

3 comments on “We can’t control the price of oil

  1. Werner

    Problem is the oil price is roughly the same now as it was in 2010 and in 2010 we paid about R8 per litre for petrol. The levies we pay on fuel is around 40% which is ridiculously high and government can’t cut it due to wasteful expenditure and don’t know how many billions spent unaccounted for over the last 10 years so they need the income. Major issue is, if they were not so corrupt and actually knew where money went and governed properly this Levies would not have to be so high at all.

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