The Importance Of Crude Oil In South Africa

According to Devold (2013) Crude oil is petroleum liquid within earth that comprises of small components of metals and hydrocarbon, which is the combination of hydrogen and carbon dioxide. Crude oils have numerous elements that make them more or less attractive to refiners. Oil that is less sticky and flows more easily, is referred to as light crude oil, while stickier that requires heating in order to flow is referred as heavy crude oil.
Light crude oil is used to mix finished products such as diesel, gasoline and jet fuel. It doesn’t require intensive processing at the oil factory, while heavier crude produces higher quantities of less valuable products such as fuel oil and asphalt. Heavy crude is more difficult to process effectively into refined products due to the fact that it comprises of impurities (Levine et al., 2013).
1. Crude oil in South Africa
Wabiri and Hamusa (2011) discussed the importance of

Crude oil economic impact in South Africa
The International Monetary Fund (2015) indicated that crude oil prices could raise between 0.3 to 0.7 as the prices decline could generate growth of 5% in 2015, while South Africa spend 20% or more on its import bills on crude oil. South Africa is considered as an oil intensive country as it uses high proportion of oil to produce units of its GDP particularly for transportation.
According to Douglas, (2015) low oil prices place strain to African oil exporting countries such as Nigeria while net oil importing countries stand to benefit as costs decline the fuel prices also decline. Although in South Africa it’s much helpful considering Eskom increasing importance of diesel as it struggles to generate enough power to meet demand (Douglas, 2015).
The ripple effect of lowering fuel prices is expected to have a knock on effect on food and consumer goods prices, as it impacts production, transport costs and easing inflation which might benefit consumers I the short run (ABSA, 2015).
6.1 Rand value and interest