Getting more out of oil

‘Any economy has to be clear in its mind what the role of energy is in the country. In South Africa you have to make a decision — do we see ourselves creating jobs in the energy sector, or do we use energy to create jobs somewhere else?” said Nhlanhla Gumede, Deloitte Consulting’s associate director for the oil and gas sector.

Recently appointed as adviser to Minister of Energy Dipuo Peters, Gumede was speaking at the Mail & Guardian’s Critical Thinking Forum on Tuesday.

The forum asked: ‘Are government and oil companies on a collision course or can they find common ground?” Despite their different backgrounds, speakers had more points of agreement than disagreement.

‘We know that there won’t be oil forever and this is something we need to start looking at,” said Peet du Plooy, WWF South Africa’s trade and investment adviser.

Although Gumede maintained that South Africa, as a minerals-based economy, had to begin ‘with what it has”, namely coal, he conceded that the sector needed to evolve.

He pointed to Finland and Norway as countries that had derived additional benefits from the oil sector. ‘They used their oil sector to develop core competencies, to develop sectors that now have nothing to do with producing oil,” he said.

The main issue for Du Plooy was how to reinvest revenue from oil. ‘Governments like Norway have successfully addressed this. If you’re getting revenue from a non-renewable source, you have to reinvest it so that you can be assured of future earnings. I don’t think we’ve got into that depth in terms of the continent,” he said.

Economist Tony Twine tried to set the cat among the pigeons with his comments on the demise of liquid fuel. ‘I think that the auto-cycle engine — an engineering principle that is over 100 years old and has remained largely unchanged — is already on the way out and more expensive than cheaper fuel,” he said.

But both Gumede and Du Plooy agreed with his sentiments. ‘I doubt that you will find a replacement for oil that you can put in an internal combustion engine,” said Gumede, adding that he hoped people who bought cars in future would ‘start to think about buying different types of cars, maybe electric cars”.

‘Oil is unique in being entwined with transport so you can’t really make a liquid fuel policy in the absence of a transport policy,” said Du Plooy. ‘This is also where the impact on the poor arises.

Transport makes up a massive proportion of the average income and the only real option that we have there, as we can’t change the price of the oil, is to have good public transport and to subsidise it.”

Du Plooy pointed out that liquid fuel is only 20% efficient. ‘We go through so much trouble to get this stuff and then we waste 80% of it in internal
combustion engines.

But oil is useful for so much more than simply burning it. Plastics and almost every chemical come from oil. We need to ensure that we have this oil, preferably not for burning.”

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