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Monday, November 12, 2007

Editorial on Energy News

Editorial: Peak Oil, Eskom Load Shedding, and Tariffs

Nearly a hundred dollars for a barrel of oil. So much for the age of cheap oil, and welcome to the peak in global oil production. If many leading geologists are correct, global rates of oil production are either in or about to begin terminal decline. Simply put, we are running out of oil on a global scale, and this is the underlying reason for the ever increasing price of oil; not market jitters over a possible Turkish invasion of Northern Iraq.

As any classical economist would tell you, when the supply of a good is less than the demand for that good, the price will rise. Under the standard view of resource scarcity, informed market consumers would then purchase an alternative resource or reduce their demand (i.e. consumption). Neither of these looks likely for oil. One, there is no alternative to petroleum as a major source of global energy at present. Two, demand will keep on increasing as the modern global economy is based upon using petroleum as an energy source (Will shipping, flying, agriculture, plastic manufacture stop? I think not.). Three, emerging economies such as China and India require additional petroleum to fuel economic growth. Therefore, the price will continue to rise.

Nor are biofuels and coal to liquid technology the solutions. In regards to biofuels, we simply do not have enough arable land available for biofuels production to replace petroleum to a significant degree. End of story. SASOL-like technology is incredibly inefficient, produces massive C02 emissions (trading oil supply woes for the greater headache of climate collapse), and will hasten the crisis of Peak Coal (another finite resource). The only worthwhile future is a transition away from a fossil fuel economy on a global scale, and no one is talking about that.

What does this mean for South Africa & Africa? In the SA Energy Policy & Analysis section of this edition, the Association for Peak Oil South Africa gives its predications, and the effects of peak oil on the militarisation of Africa are illuminated.

While SENSE does cover Eskom recent load-shedding (wet coal...sure) and points out the role of industrial users in supply problems, it also covers the sticky issue of tariffs. The SECCP has recently completed a study of Eskom's domestic tariffs, with the conclusion that poor suffer unjustly. SENSE also notes that the backdoor privitisation of Eskom has begun, with private industry to generate 30% of all power. Here's another prediction; this will mark the beginning of a long and dirty road to a deregulated energy industry with spot markets, greedy electricity traders, rising prices, and the end of the dream of free, basic electricity for all. SENSE will continue to cover further developments.

The good news is that robots in Cape Town get solar power. That should help prevent traffic congestion when Eskom next flips the switch on us and not (due to penalty clauses in supply contracts) to the big industrial users.

Finally, this edition of SENSE includes a recap of the Energy Summit. Rewriting the 1998 White Paper? We'll see.

Tristen Taylor
Energy Policy Officer
Earthlife Africa Jhb
7th of November 2007

SENSE (Sustainable Energy News by Email) can be found here.



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