Effects of 1973 Oil Shock and 1979 Energy Crisis on South Africa’s Economy – conclusion

With regard to the future impact of oil on the South African economy various strengths and vulnerabilities have been advanced. Wakeford (2006) for instance notes gold might not be a significant contributor to counteract effects of oil shocks since its contribution to the country’s GDP has dropped. The transformation of the rand into floating currency following increasing ties of between South Africa and other global economies has also been argued increase its vulnerability to periodic crises hence generating greater adverse impacts to the country incase of oil shocks (Wakeford 2006). Additionally the vulnerability of the economy to oil shocks has been advanced to be influenced by the level of oil imports (Wakeford 2006). In such aspects the statistics from DME (2006) digest report indicate the crude oil contribution to energy requirements for South Africa to be gaining on some of the contribution by coal (P. 2). Concerning the short term risk of future oil shocks Wakeford (2006) identifies different supply risks that could impact on South Africa and global economy. The OPEC production cuts, geopolitical tensions/ conflict and extreme weather conditions have been proposed as the possible short term risks with the last two factors being advanced to be aggravated by the oil market speculative activity (Wakeford 2006, p. 15). Further the increasing clamor for more environmentally friendlier energy sources could prove an important factor in South Africa’s continued use of coal for most of its energy requirements.

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