A while ago, I was tasked to carry out an investigation linked to the movement of oil and processed fuel into the country.
It was not new to me; I had been involved in that sphere before, but it has been rolling around in my head.
Last week, I received a report from the US in which the writers express the opinion that the oil price is unlikely to rise much over quite a long period. In fact, they state: “Never.” I am inclined to agree with their analysis.
Fundamentally, a number of folks say that much of the higher oil prices of decades past were due to political and social manipulation, and were not a reflection of true market forces.
Oil was largely controlled by forces in the Middle East, and so Middle East politics played a part. Oil is also a substantial part of the economy of the Middle East, so virtually by definition, it is part of daily politics.
Recently, I flew into both Doha and Abu Dhabi, and the view from the aircraft is interesting, in an analytical sense. You see nothing but sand all around and then the city appears sitting essentially in the middle of nowhere. In both cases, there were straight roads extending for kilometres out of the cities. I measured their length from the aircraft and I could not figure out what they are for. It looks like massive expansion is planned, but hard to believe.
But now that both cities sort of erupted out of psychology, there is no oil reason for them to be there. So what is their future?
But let me get to my point. Here in South Africa, I think that we must build a new oil refinery. I also think that we must try to import more oil from Africa. I do not underestimate all the politics involved.
Now, with a lower oil price, there is a temptation to just import processed petrol and diesel and to skip out refining oil locally. I think this is dangerous.
There are refineries in Durban and Milnerton, near Cape Town. The Milnerton refinery is quite ‘new’, but that actually means that it was built in 1966.
The Durban situation is that, when an oil refinery area was chosen, a long time ago, that area was way out in the bush. It also used to be very close to the main airport, but now the airport has been relocated far away, so the chances of big aircraft landing on an oil tank is very much reduced.
The refineries produce aviation fuel, liquefied petroleum gas, bitumen and lubricants, as well as petrol and diesel. So, if we were ever to get to a situation in which we were to reduce oil imports because we decided to import processed fuel, we would also be dependent on getting aviation fuel and bitumen and whatever else from someplace.
There is also, of course, the First World drive to use ‘cleaner fuels’. Much of this was driven by environmental activists trying to ‘save the planet’. Some of the cleaner fuel movement was related to general engine performance enhancement.
Since there is an inducement for us to use the enhanced engines, we are induced to move towards the very low-sulphur ‘cleaner fuels’.
I am not sure how much of this is due to improvement in engineering for the sake of engineering, and how much is ‘save the earth’ politics.
The point is that we do not want to find that we move more and more into a situation of being dependent on imported fuel and, therefore, find ourselves under their influence.
I would rather see us import African oil, refine it and then resell the fuel to Africa and elsewhere. We should be able to build some very long range pipelines to bring oil in and reduce major ship movement that takes place now.
I throw these thoughts into the ring, so to so speak, for people to ponder and debate. There is much more to the whole story than I have been able to explain here.