We all sigh with relief when the price of petrol drops, but are low oil prices really a good thing? In our latest debate, Personal Finance Editor Kabous le Roux takes on Business Editor Ebrahim Moola…

Kabous le Roux reckons that while cheap oil feels good (for now), it'll really hurt tomorrow.

Expensive oil hurts, that's for sure. But cheap oil kills…

Like most people, I feel pain when the petrol price goes up. I also wait in line to fill up before that dreaded first Wednesday of a month on which the Rand and oil price conspire to make me poorer. Why then do I believe that expensive oil is, in the long run, good for us?

Humans have suspected for decades and known for years that our addiction to oil is changing our climate and threatening our continued existence on this planet. And yet, the growth in our consumption of the stuff continued unabated. Up to now.

When oil peaked at US$150 last year it caused demand in the US to plummet. Americans, who consume a third of the planet's energy, started driving less and using more public transport (its use is at a 50-year high). Sales of Ford's gargantuan F-Series bakkie, a long-time bestseller, went down by 22 percent while sales of more fuel efficient cars went up despite a slump in sales of cars in general.

The massive drop in demand caused the oil price to come off its peak. However, the deepening recession in America is making oil at US$70 (its current price) seem more like US$100. Lucky for the environment (and therefore for us, no matter how wrong it feels to say so), oil still feels expensive.

Have the Americans suddenly realised the folly of their ways? Of course not! The affordability of petrol has simply deteriorated enough to influence consumer behaviour. Nothing, not even the threat of environmental apocalypse, seems to be as effective as price signals and the market mechanism in promoting energy conservation and fuel efficiency.

Our behaviour is unsustainable — we must change our ways. However, it seems as though we'll only change if it hurts our pocketbooks...

So, expensive oil forces consumers to change their ways. But there are other advantages too. Costly oil triggers investment in renewable sources that doesn't damage the environment. If oil is cheap why (never mind the fact that it's destroying the environment) find an alternative?

If petrol continues becoming more expensive we'll see unprecedented technological innovation. Consumers will buy the hybrids and electric vehicles that manufacturers will aggressively improve to satisfy demand that will most definitely increase along with the cost of petrol.

Other advantages of expensive oil include, but aren't limited to, an increasing preference for local manufacturers and food production, the prevention of urban sprawl, improved public transport, fewer traffic deaths and increased 'work from home' arrangements (granted, not always a benefit).

In a world without oil we'll keep more wealth at home and our weak position relative to oil exporters would be eliminated. The world should, furthermore, be a more stable place as the world's 'petro-tyrants' (e.g. Iran, Saudi Arabia, Russia) lose their power to bully and 'petro-robbers' like the US have a reduced need for military conquest to ensure a steady supply of oil.

Obviously, the soaring cost of petrol is hurting South Africans, especially now that we're also being pummelled by recession and stubbornly sticky inflation amongst other things. Expensive oil hurts — for a while. But a few more decades of relatively cheap oil and the pain will become permanent and unbearable.

While acknowledging the potential harm of climate change, Ebrahim Moolla is much more concerned about the potential for anarchy that high oil prices bring.

I don't think it's necessary to paint a post-apocalyptic picture to put across the effects of a stratospheric oil price: the recent spike in Opec's wares are a blot on the memory. Food riots; endless queues at filling stations; inflation ballooning; the emergence of petrol theft — very real consequences.

For the purposes of this debate I'll argue against high prices, acknowledging that very low prices come with their own set of difficulties, including black gold hedonism and the heady fumes of climate change. Whether it's a V6 guzzler or an 800cc lawnmower, the world's engines run on oil. Its impact is felt not only on social lives and Sunday drives, but on the most basic of human needs. I can't with an easy conscience toy with the lives of the entire human race. And this is quite apart from the obvious dampener on economic growth.

There is a very persuasive link between high oil prices and global political instability. Free-flowing petro-dollars allow autocratic regimes to indulge in military adventurism, greater patronage and military spending and move further up the scale of repression. Those in power know full well that they can consolidate their positions because the rest of the world covets their resources, and their own citizens can easily be appeased by a little token public spending. And before you start thinking those bloody Arabs have had the world by the short and curlies for too long, know this. Yes, high oil prices may allow the neighbourhood sheikh to buy that gold-plated Hummer, but it does nothing for the man on the street. In Saudi Arabia, the world's biggest crude exporter, high prices drive up the cost of food and imports, because the extra revenue is invested abroad to counter the inflation threat.

Opec is a cartel — the same catchword that would have our own Competition Commission pricking up their ears. Energy will always remain a strategic commodity, subject to market fluctuations and manipulation, whether it comes in the form of coal, biofuel or cowpats.

Without invoking the spirit of Aristotle, moderation and endurance must take precedence over the extreme. The oil price should be high enough to counter research complacency and promote the economy of use, but not so high that it becomes the overriding factor in every petty decision. To focus on the visions of the future to the detriment of the present is a sure route to oblivion.

Do you agree with Kabous or Ebrahim? Share your thoughts below...

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