Petrol & Cola

Whose money?

Many years ago I employed someone in my small company who was formerly a director in a big organisation. A friend then gave a kind warning and said that one should be watchful when employing someone from such a background.

He is used to spending other people’s money, money that he did not work for himself.

People who start their own businesses know what hard work it takes to get enough clients to support your business to make it sustainable. Because you are responsible for debts incurred, you take a more conservative approach to spending money.

Maybe something similar plays a role in the mismanagement of funds in the public sector that is currently being investigated. You do not squander millions of hard earned bucks on a birthday party for your four hundred and eighty “closest friends”, as one politician’s daughter once did.

This makes me think about how the price of fuel, which has an influence on almost everything, spiralled out of control over the last few decades.

Petrol vs Cola

Many moons ago when I was at school we paid 30 cents a litre for Coca Cola and 7 cents a litre for fuel. Now we pay round about R20 for a 2 litre bottle of Coca Cola which comes to about R10 per litre whilst the price of fuel is fast approaching R17 per litre. This means that the price of Coca Cola increased by 3300% whilst the price of fuel increased by almost 24 000%.

Now there may be a quadrillion reasons why fuel became so expensive compared to Coca Cola; we can reason that fuel is a limited resource, we can argue that it is an expensive process to extract crude oil and to refine it to produce petrol, that the price of crude oil is determined internationally, and many more. Yet I suppose each process remained more of less similar over time; perhaps better equipment was implemented, but that I suppose cuts both ways.

So what other factors could have affected these prices?

# Private- vs Public sector

Perhaps the fact that Coca Cola is a privately owned company, whilst the government has a significant influence on the price of fuel. More than 35% of what we pay for every litre of fuel consists of taxes and levies collected by government.

Also government policy and legislation has a huge impact on the exchange rate. The current price for Brent crude oil (±$80 per barrel) is only about 50% of its all-time high of $145.31 in July 2008. Yet in 2008 the Rand / Dollar exchange rate was R8-00 per Dollar (Now more than R14-00 / Dollar) and we paid about R10-00 per litre.

According to Ian Hetherington in his book The Forgotten Heroes,

entrepreneurs are the true heroes of the economy

because on the one hand they supply customers’ needs and create jobs, while on the other hand they need to deal with all the red tape and price- and tax hikes that government impose on them. Therefore let us cherish the entrepreneurial spirit and support the private initiatives of the many hardworking and honest entrepreneurs in our society. Their endeavours in a free market benefit each one of us.

Unhappy in your job and consider starting a business? Consider to do a Career Direct Assessment first. It will reveal who you really are and will set you on the right course.

Also tune in to my radio program “Jy die Entrepreneur” Monday evenings 20:00 and Saturdays 12:30 on Radio Namakwaland www.934fm.co.za.

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2 Sam 12:25 “So he called his name Jedidiah because of the Lord.”

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