RSA energy prices explained

In the depths of the 2009 recession I was driven off the road by two dicing 18 wheelers. It was a very close call. It really was. I was lucky only the car was written off.

I used the insurance proceeds to buy a rather ridiculous Chev UTE sport. No, not a delivery van, it’s the Aussie version with a 6 liter Chev corvette engine. My mother disapproved. And so did many others.

But it was going really cheep. Like R150 000 less than replacing the beemer. And every man should have a red V8 at some point in his life.

I love the beast. It makes commuting to Port Elizabeth a pleasure. And surprise, surprise it doesn’t use much more than my old beemer. That 6 liter engine only gets to 2000 revs at 140kph.  Six years later I have no intention of replacing it.

But a big engine makes one sensitive to oil prices.

This morning the oil price dropped below the 2009 price. Marvelous!

ML Oil Prices 1

More good news. The 1-year oil future reflects that the oil price will remain below $50 pb.

At the same time the Rand has halved in value against the dollar. So the Rand price per barrel has increased a bit.

ML Oil Prices 2
Unfortunately the basic fuel price is only 56% of the price at the pump. The rest is the middle-man and tax. So, although the oil price is back at 2009 levels, the price at the pump reflects something different. Ja, like double!

ML Oil Prices 3

Perhaps we will get another R1 off if oil prices stay where they are for a while.

Back in January 2015 those in the know were predicting a sustained oil price of below $50pb. Based on this RSA increased the fuel levy by 80,5 cents per liter, effective 1 April 2015. It was a risky call and one can only hope a similar increase is not required in 2016.

In all the Chev was a good bet. But I would have looked pretty silly if the oil price hadn’t dropped. But fuel prices are not the be-all-and-end-all of my worries.

Now plot the oil price, inflation and electricity prices against the same 2009 base. And we get:

Ml Oil Prices 4

So Matthew, it’s not the car you drive, or even how you drive it. The bigger problem is ESKOM.

The maxim used to be ‘ if its got wheels or propellers it will drive you broke.’ In RSA it’s ‘ anything with a plug.’


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