The news that Shell is leaving South Africa has led to a lot of interesting speculation and a lot of stupidity. Are they leaving for “portfolio management” reasons or because they think South Africa is a corrupt disaster where investors are guaranteed to lose money? In any case, is the future of oil doomed as all fossil fuels will be replaced by “green energy”? Electric vehicles (EVs) will replace internal combustion engine (IC) cars (gasoline and diesel) Will South Africa close all its refineries and become dependent on imported finished fuel? Is it more important to have a car that doesn't emit harmful emissions, or to have a car that can accelerate from 0 to 100 km/h in less than 3 seconds? Do you want your car to save the planet or do it at traffic lights? Want to beat everyone from?
There were some similar questions last month when BHP made a bid to buy Anglo's assets outside South Africa. Was this because BHP thought the South African investment would fail, or did it just happen that the South African assets were not part of the company's “strategic vision” (or what is the correct terminology)? Bizarrely, when BHP itself exited South Africa in 2015, it also sold its local assets and subsequently established S32. It seems to me that many of Anglo's mining assets, particularly platinum, are still very strategic, but more on that in EV below.
Shell cited problems with BEE partner Thebe Investment Corporation, which owns 28% of the South African branch. (Thebe has close ties to his ANC.) Of course, BEE is just one form of legalized corruption. If you want to do business in most African countries, you have to pay large bribes to the relevant ruling party politicians. That's just part of the cost of doing business in Africa. If you want to do business in South Africa, you will need to purchase a BEE partner. You don't expect anything from them except to take your money and complain that you want more. Is this high cost worth it for international companies? More and more people are saying no. President Ramaphosa said, “BEE is here to stay.'' In that case, foreign investment is there to stay away.
Shell's withdrawal and BHP's bid for Anglo's non-South African assets both raise environmental concerns regarding EVs. The future of Shell and other big oil companies is limited, say foolish people, because in the future all cars and trucks will be electric. Platinum's future is limited, say other stupid people (many of them same stupid people), because platinum's biggest market is catalytic converters in IC car exhaust pipes, and soon all for EVs. This is because it will be phased out. (Catalytic converters complete the incomplete combustion of hydrocarbons and carbon monoxide, converting them into harmless water and CO2, and break down dangerous nitrogen oxides (NOx) into nitrogen and oxygen. Sulfur oxides (SOx) cannot be reduced) From the mass media and all politicians, electric cars save the environment, sell better than other cars, and someday all IC cars will be banned. I heard it would be. That's nonsense.
The reality is that electric cars are very expensive, very heavy, and very inconvenient. It has a short range and a tendency to explode, making it quite dangerous. In Greater London, there were 507 reported battery fires from various types of EVs between 2017 and 2022. There were 219 such fires in 2022-2023 alone. The electric motor is fine, but the battery is not. They are made of highly toxic materials, are not very durable, and are very expensive to replace. Electric cars seem to be worse for the environment than IC cars. Governments have used tax breaks, subsidies, and mandates to lure or force customers to buy EVs, but customers are losing interest.
EV sales are declining, resale values are declining, and complaints are increasing. Thanks in part to Elon Musk's manufacturing genius and slick salesmanship, wealthy elites were led to believe that EVs represented both high fashion and environmental virtue. So they bought them as his second or third car for his mansion in Beverly Hills. However, that market currently appears to be saturated. Ordinary people aren't interested. I think the future market for EVs is very limited, especially in South Africa over long distances. I think IC cars and hybrid cars are here to stay. So more oil and platinum will be needed. The ANC's hesitation over policies to encourage EV production here was a good thing, although more by default than by design.
Of course, behind these arguments is the anti-scientific nonsense of dangerous man-made climate change caused by rising carbon dioxide. It is true that we have increased CO2 by burning oil, coal and gas. But this is the best thing we've ever done for the planet, with little to no effect on the climate and amazing effects on plants. How long will nonsense continue to prevail? I don't know. There are very powerful vested interests, both ideologically and economically, who demand that we need to reduce CO2 in order to save the planet.That's completely ridiculous, but in the 17th century, witches were burned at the stake as well.th century and it did terrible harm.
Shell wants to eliminate its “downstream operations” in South Africa, i.e. its retail operations, i.e. petrol stations that sell finished goods. “Upstream operations” means extraction of raw materials, i.e. drilling for oil and gas. South Africa has potentially large onshore and offshore gas fields, but Shell has been stopped from exploring on bogus environmental grounds. A refinery is required to convert the raw material crude oil into a finished product. There were six such machines in South Africa, but none appear to be in operation at present. Refineries take crude oil and separate its components using distillation and other processes. Each component has a different boiling point, so each boils or condenses at a different temperature. The lowest boiling point is liquid petroleum gas (LPG), which is a mixture of propane and butane. It is an excellent fuel and is very convenient to handle as it liquefies at low pressure. Next comes gasoline, paraffin, diesel, heavy fuel oil (HFO), and finally wax, asphalt, and lubricating oil. Our refinery used to do this separation, but we no longer do it. This is just another step in the hollowing out of industrial processes that add value to our raw materials, in this case imported raw materials.
The reasons for the closure of our refineries are complex and contradictory. International pressure, especially from Europe, required refineries to improve the quality of their fuel to very high standards, even unreasonably high standards. The sulfur content had to be very low. (Coincidentally, Sasol makes the purest diesel in the world, with no sulfur at all.) The octane rating of our gasoline had to be very high. This was unreasonable. In a gasoline engine, the higher the compression ratio, the more efficient the engine. However, if the compression is too high, pinking Inside the combustion chamber, it can cause very serious damage to valves, pistons, and cylinders. Gasoline engines use spark ignition, where a spark generates a single flame that spreads throughout the cylinder, significantly increasing temperature and pressure and pushing the piston down.If the compression ratio is too high, the pocket pressure ignition or Before explosion or pinking or knockingmay damage the engine.
In the past, lead added to gasoline to increase its price octane number, which means it is less likely to turn pink. High octane does not increase the energy of the fuel, it only increases the pressure at which pink kinging occurs. However, lead was found to be contaminating, so it was removed and replaced with chemicals such as MMT. Older cars with cast iron cylinder heads cannot use completely lead-free gasoline, as lead acted as a lubricant to protect the valves. However, all cars from 1995 onwards have aluminum heads with hardened steel valve seats and do not require lead. (Diesel engines use pressure ignition, which means there are many small fires throughout the cylinder.) In a sense, diesel engines are always pink, but for some reason I don't I don't understand, but you won't be harmed by it. It may have a very high compression ratio.
Our refinery had to be upgraded to produce fuel with very low sulfur and very high octane. It was very expensive, and government regulation of it was slow and vague. And it was ridiculous. The only reason to use high octane gas is to provide short bursts of very high power, such as when the light turns green and you start driving. (Perhaps the automaker required it.) Otherwise, the existing octane level was fine. Therefore, the refinery was not upgraded. In fact, they were closed. Shell would have also been a part of this harrowing experience.
The auto industry has to accommodate environmentalists on the one hand, and boy racers on the other. Car manufacturers have to consider our fragile planet, but they also have to keep in mind the need for men to own a car before anything else on the road and be able to attract the cutest girls. there is. (British motorcycle magazines refer to the latter ability as:) pulling force.) Otherwise, the car will not sell to wealthy young people. Newspaper editorial sections are filled with solemn arguments about greener transportation and lower emissions per kilometer, while automotive columns are filled with stories about ultra-powerful engines that are as fast as Superman. It is written about a surprisingly expensive car equipped with.
in Business day Peter Bruce, dated May 9, 2024, has a column titled:If you obfuscate it any further, you won't know why the shell left. ”. There is an article titled “'' in the motor section.The new Ferrari 12Cilindri has a V12 engine and a 340km/h capability.. Although this car only has two seats, it has a 12-cylinder engine with a capacity of 6,500cc. It produces 610kW and 678Nm. It can travel at speeds of over 340km/h and achieve “0-100km/h acceleration in just 2.9 seconds”. The cost is R8.65 million. Business day I think it's adorable.
You have to be proud of your car. It is a 1984 Suzuki SJ410: 4 cylinder, 970 cc engine. 35 kW, 0-100 km/h in about 2 minutes (unless it's windy). I paid his R27,000 for this car in his 2000. I will challenge Ferrari to a race whenever it wants, provided it can choose the terrain on which it races.
While talking about fast cars and BEE partners, I noticed that one of ANC's favorite patrons and BEE contractor, Edwin Sodhi, owns several Ferraris. He is famous for winning the contract to repair the Roywal sewage treatment plant (cholera subsequently killed 17 people in the area). When President Ramaphosa said “BEE is here to stay”, he was undoubtedly pointing proudly at Thebes Investment Corporation and Edwin Sodhi. You can imagine Ramaphosa's big, charming smile as he declared: “BEE works. Look at Edwin Sodhi's Ferrari!”
Every time a major international company declares, “We have full confidence in South Africa,'' you can be sure that they are about to leave. Frankly, I think everyone must be crazy to invest in South Africa right now. Listen to announcements by President Ramaphosa or senior officials from the ANC, EFF, SACP, MK (all ideologically identical). They all hate the West and support countries that attack it, such as Iran, Cuba, and Russia, which they all condemn. white monopoly capitalThey all hate business, believe in forced BEE to deter investors, and support nationalization and expropriation without compensation. They all love capitalist products such as BMW, Mercedes and Ferrari, but hate capitalism itself. General Motors is out, BHP is out, Shell is out, and I feel like all the big oil majors are going to follow suit. International mining investment in South Africa is shrinking towards zero. Is the ANC happy that everyone is leaving, or is it disappointed? It probably doesn't realize it, but it will feel jealous and furious.
The author's views are not necessarily those of Daily Friend or IRR.
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