IS YOUR FUEL TANK FULL YET? — In all honesty, the price of fuel has been well below what it should’ve been for the long term sustainability of its use and productive value. Essentially, the narrative between the tensions in the global economy of resources is a well ignored point of departure in the public domain. Fuel price upward pressure is not so much about the macro dynamics of currencies and markets, but it has more to do with the fundamentals. So firstly, how do currencies interact with the price of fuel? One way of looking at it is considering the impact of fuel exchanges taking place in US Dollars.
In this case, an appreciation in the value of the dollar makes fuel prices “cheaper” when buying in US Dollars, but will certainly be more “expensive” in the local currency if it is not keeping up commensurately with the dollar. Another way, is to consider the fact that fossil fuels are somewhat finite— they are not eternal on earth— so we could potentially find more fuel reserves but they wouldn’t reflect the future energy demand as populations, industries and incomes grow. This is where technology is absolutely crucial as an instrument to diversify businesses toward new energy efficiency solutions and alternative sources.
Energy efficiency as one PhD student at the NWU notes is the lowest input of energy for a higher unit of output. We see this in the 1 liter engine trend: these vehicles consume less petroleum per 100km on average, but need to produce the same structural benefits—which is actually not possible without fuel levies, taxes and other impositions to control the true cost. It may well be more expensive to have a lower fuel price than to have a higher one in the long term— although it really hurts right now.