Frack the Karoo and solve SA’s problems?


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THICK END OF THE WEDGE: Imagine an SA able to make its own fuel

ON WEDNESDAY, the price of petrol will go up another gajillion cents. There will be a Great Lamenting until the first Wednesday in September, by which time this Wednesday’s price will have begun to seem almost reasonable and even fair. And then the same thing will happen in October, November and forever.

Partly, it’s a function of the exchange rate, oil being priced in dollars. Partly it’s a function of collusion (this one doesn’t suit the political masters of the competition authorities to trouble themselves with) to keep labour and other forecourt charges as high as possible. Why can’t you fill your own tank, and why is there always a queue around the block, do you think, when petrol station franchises become available? And partly it’s a function of the inability of the Zuma administration to make any sort of economic policy decision which might involve actually doing something.

I refer, of course, to the fracking of the Karoo, which, you would think, would already be well under way given our chronic and crippling dependency on foreign supplies of fuel. Shale oil and gas will, in just a few years now, make the US entirely able to fuel its own economy. We have not even begun to understand what that means for the global political economy.

Imagine a South Africa able to make its own fuel? Gas from the Karoo and biofuels (from cane or beet) cultivated by emerging black farmers would change everything. It would change the way we look at land reform and food security. Those Karoo farmers putting up such a stout defence against fracking could be offered farms in Mpumalanga (where you can earn twice as much on half the land), and black land claimants in Mpumalanga could be offered places in the Karoo. What would you rather take over — an expensive, demanding fruit-exporting business in the northeast of the country, or a piece of land on top of an invisible oil field where you get paid for the privilege of just being there?

Just a thought. I know we are emotionally attached to land and that it’s hard to leave, but, hell, we have got to get fracking and reduce our dependency on foreign oil. This Sunday morning I filled what the gauge on my little Nissan NP200 bakkie said was just over a third of the tank. It cost R534.91, so perhaps the gauge is faulty. But if we made our own fuel it could have been a fraction of that. What must it cost now to fill up a Land Cruiser? Don’t laugh — it’s when policy makes the middle classes feel poor that governments get taken out. I use my little bakkie for entirely frivolous purposes, but affordable energy and fuel are a core condition for anything like the economic growth we need to make our future as a country safe.

I know the Karoo is beautiful and, for the most part, it always will be. But it contains just too few people blocking access to just too much potential wealth in a country with way too many poor people. We should be fracking the daylights out of the Karoo.

 

 

INSTEAD of getting on with what is important though, Jacob Zuma indulgently allows his ministers to find new ways to waste money. One is going to build a new state-owned integrated steel mill. Another wants to build a brand new state-owned oil refinery — the biggest in Africa. For what? There isn’t a credible reason for either, but unless a powerful voice stands up for reason soon, both will be built.

Each, in its own special way, will then become a hole down which to throw taxpayer rands. All the while, no doubt, pretending to provide some grand service for “The People” while, in fact, impoverishing them and enriching a select few.

PetroSA wants to build a big refinery at Coega near Port Elizabeth, too far away from the main local markets to be of much local use. Apparently it would export, for hard currency, what it refines from imported crude. To whom and against what competition one wonders, and what kind of weird rationale involves making a significant industrial investment in order to back up a currency speculation play?

A steel plant funded by the Industrial Development Corporation would supply South Africa and Africa with product at “developmental” prices, despite our labour and electricity costs. Again, try not to laugh. Almost all steel is a commodity these days and there is an abundance of capacity already idle in the market. Of course, some day there might be demand. But if you must take a R3bn bet with taxpayer funds, surely it should be on building for a niche rather than a commodity market?

COMMENT FROM JONATHAN DEAL:

Mr. Bruce’s cavalier solutions and humorous views on how to fix South Africa’s energy, land redistribution and revenue issues are sure to have raised a chuckle or two amongst Business Day readers, but are unlikely to have been taken seriously. Quite simply put, having regard for the holistic environment, the efficacy of onshore shale gas development has not been sufficiently proven in South Africa to justify the issuing of licences for exploration.

I will happily meet Mr. Bruce in any public forum to debate this issue.

Jonathan Deal, CEO, Treasure Karoo Action Group 023-358-9903

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