Quantifying South Africa's crude oil import risk: a multi-criteria portfolio model
SOURCE: Economic Modelling
OUTPUT TYPE: Journal Article
PUBLICATION YEAR: 2010
TITLE AUTHOR(S): N.Wabiri, H.Amusa
KEYWORDS: ECONOMIC GROWTH, ENERGY SUPPLY, POST APARTHEID SOUTH AFRICA
DEPARTMENT: Public Health, Societies and Belonging (HSC)
Print: HSRC Library: shelf number 6139
HANDLE: 20.500.11910/4469
URI: http://hdl.handle.net/20.500.11910/4469
OUTPUT TYPE: Journal Article
PUBLICATION YEAR: 2010
TITLE AUTHOR(S): N.Wabiri, H.Amusa
KEYWORDS: ECONOMIC GROWTH, ENERGY SUPPLY, POST APARTHEID SOUTH AFRICA
DEPARTMENT: Public Health, Societies and Belonging (HSC)
Print: HSRC Library: shelf number 6139
HANDLE: 20.500.11910/4469
URI: http://hdl.handle.net/20.500.11910/4469
If you would like to obtain a copy of this Research Output, please contact Hanlie Baudin at researchoutputs@hsrc.ac.za.
Abstract
A major consequence of South Africa's strong economic growth since the democratic dispensation of 1994 is the rapid increase in domestic demand for oil energy. With small amounts of proven oil reserves, the rise in oil demand as an energy source has resulted in South Africa's growing dependence on external sources for its domestic crude oil needs. High oil prices, instability in major oil producing regions and the rise in 'oil nationalism' are major concerns for the security of South Africa's oil supplies. Accordingly, a comprehensive understanding of oil import security risks can serve as a vital guide in formulating any energy policy framework's) aimed at alleviating the impact of such risks. This study utilises portfolio theory and develops an empirical framework to provide quantitative measures of systematic and specific risks of South Africa's crude oil imports over the period 1994 to 2007. The paper examines the relationship between supply sources diversification and oil energy security risks, and provides an objective evaluation of different import adjustment strategies on South Africa's total crude oil import risks. The results show that a policy of having constant monthly imports from each supply region reduces the specific and systematic risks of the oil import portfolio by an average rate of 71% and 2.9% respectively. Significant reduction in specific risks of South Africa's oil imports is achieved if imports from risky regions (mainly the Middle East) can be diversified to relatively less risky regions of Europe and North America.-
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