The road to hell

15 05 2008

by: Matthew von Abo

The world is speeding down dual carriage traffic-less freeways of uncertainty with severe and unrelenting twists and turns that punish the populace which cling to its surface. The world economy is slowing down to stagnation as the world credit crunch suffocates the banking and property sector. Global inflation is climbing at an unrelenting pace and the desperate search is on as an energy crisis looms. The castigate for the poor and ultimately all who live and breathe on this good earth will then be affected ultimately by potentially one of the greatest humanitarian predicaments imaginable: the dramatic upward swing in global food prices. According to the World Bank, the research analysts at Bloomberg and the World Food Program, global staple food prices have soared in recent history. For example rice which is considered one of the world’s staple food products and which fill the stomachs of over 3 billion people on a daily basis. It has increased by 74% between March 2007 and March 2008. But this pales in comparison to the tremendous increase in the price of wheat, which has increased as much as 130% in the one year. This crazed increase thereby helps drive the poverty cycle as poorer families will spend more than 80% of their income on food to sustain life. The global food crisis has been in latency over the last ten years and has presented itself as a fiendish spectre in present day. It is made up of multiple causes but all are integrally interrelated and reliant on one another. Firstly it starts at the rise of fuel prices. In the past 4 years oil has jumped from an average of $25 a barrel to a present day price of $124.13 (15 May 2008- Bloomberg) a barrel. The mechanisms of food production within modern society are completely dependant on energy provided by oil products; this starts from fertilizers to ploughing to sowing to reaping to packaging to transport and many more activities. The next is an unprecedented rise of the emerging economies of China, India and Brazil. These countries have received near exponential growth in the past few years which have soaked up energy resources and inevitably food. With this sudden growth, consumption habits have changed as the population of these respective countries have climbed the class ladder. According to the Food and Agricultural Organisation the meat consumption in China has increased 20 Kilograms from 1980 to 50 Kilograms per capita in 2007. It requires a massive amount of resources for meat production, e.g. as much as 13 000 litres of water are needed to produce one kilogram of beef. The next cause is that related to the previous two; global climate change. Climatic instability has destroyed crops and has plunged regions of the world into weather extremes which are only expected to intensify, thereby forcing yet another surge in food prices. Ultimately, the fourth cause which is considered the saviour of the planet as a viable green energy source; Bio-fuels. Bio-fuel is now a preferred crop over food production in the developed world, as the global energy crisis’s shadow only intensifies. Rising oil prices and fears over climate change have seen a massive rise in the use of maize to make bio-fuels thereby pushing up food prices even further. According to the World Bank, more than 40% of maize grown in the United States is now used for fuel. A United Nations envoy called “bio-fuels a crime against humanity”. In essence food that can be used to alleviate the supply/demand issue is rather used to jump-start the ailing world economy and soothe the guilt over climate change. These four contributing factors, which can be likened to the four horsemen of the apocalypse, are dragging the world into unfamiliar territory. No longer is it just the sole concern of the nation state; it is now a global issue. An issue which can very quickly grow out of control.

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Driving Miss Penny(less)

27 04 2008

 

By Danielle Brock (Dangirl)

 

 

“Could you fill up my tank please?”

“Sure. Unleaded?”
“Yes, please.”

 

Sitting in my little car, with a 35 litre tank, I watch the numbers on the ‘Rand’ screen on the petrol pump go up and up.

 

“That’s R324.11 please.”

“Um, ok do you accept debit cards?”

 

These are my last words before I swipe away a big chunk out of my monthly allowance. R1000 used to last me a month’s worth of food, petrol and ‘entertainment’. Now I have to resort to the dreaded phone call back home to mom: “Do you think you could deposit an extra R300 this month?”

 

It’s comforting to know that I’m not the only car-owner with this problem. Nationwide motorists are feeling the pinch in their wallets when filling up their tanks after the increase in petrol and diesel prices that has occurred this year alone. After spending some time on the South African Petroleum Industry Association’s (SAPIA) website, I began to think. It’s scary to think that since the start of 2008 South Africans have had to fork out an extra R1.50 a litre of petrol and R2.16 for diesel. These prices are, however, dependent on the grade of fuel and region. This may not sound like much but, in retrospect, if one looks back at what they were paying this time last year, a mere R6.54 per litre of petrol (April 2007) and R5.51 per litre of diesel (January 2007). According to Statistics South Africa, this adds up to approximately 68% and 58% increase in petrol and diesel prices respectively.

 

This is not the end of the uphill climb of inflation. The Times has warned of a further increase set for 7 May of 35c for petrol and 50c for diesel. This means motorists will now be paying close to R10 a litre to run their cars. So for anyone who is reading this before that date, best you fill up soon to avoid the usual queues at your local service station.

 

But these have further implications for those who don’t even have their own forms of transport. After the 5 March increase many taxi owners put up their fares by R1. Currently, many Joza residents have to pay R6 one way to get to Grahamstown CBD. In a city where other forms of public transport such as trains and busses are unavailable (who, according to an article published on IOL, have not increased their prices since 2003), this leaves students with little option but to pay the R240 a month to get to their lectures on campus.

 

For those of us who don’t actually know the ins and outs of how these prices are calculated, an interview with Avhapfani Tshifularo, the Controlled Products Pricing and Fuels Taxation advisor at (SAPIA) on News24 revealed some necessary information useful to the layman.

 

The price of fuel is dependent on the international markets and supply and demand because if more fuel is demanded than can be supplied, the prices will have to be increased. The exchange rate also affects these prices as a weakening rand against the dollar will also increase the fuel price. This affected all of the increases in 2007.

 

South Africa regulates their fuel prices, meaning that all fuelling stations have fixed prices including Sasol, our local fuel producing company. The regulation of fuel prices has been blamed for this price hike but Tshifularo argues that deregulation will not decrease prices but rather fuel (ha ha) competition. Sasol has to follow the prices of imported fuel because petrol and diesel are international products based on other prices such as crude oil. However, the basic fuel price only constitutes about 68% of the total price while the rest is made up of levies, dealer’s margin and transportation of the fuel. By quick calculation, this means that the basic fuel price of a litre of petrol is currently only about R5, 90. The price of fuel used to transport the fuel is creating the price of the fuel. That was confusing, but true.

 

So we’re all a little more clearer on how the South African economy may just not be ripping us off, but there is a serious issue that hasn’t been addressed. Energy products do not only include petrol and diesel but also paraffin – the staple source of ‘power’ for many South Africans. In areas that electricity does not reach (ok, so that could be the whole country), dwellers rely on paraffin to cook food and power light sources. This paraffin, however, will cost a family R7, 60 a litre, just less than R2 more than they would’ve paid last year. I do suppose this is not much of an incline in comparison to Eskom’s proposed 60% increase on electricity prices – but that is a whole other issue I don’t want to get involved in.

 

I have no intentions of this having any affect on the petrol price (if it did I could drop out of university as the Superwoman) but have really learnt a thing or two. We can’t blame this damage solely on SA and we can’t expect this problem to be rectified anytime soon. I guess it’s back to the good ol’ foot action for a while, at least until I can refill my tank.