Why increase of oil prices was inevitable and why it will be inevitable in the future too!
Why increase of oil prices was inevitable and why it will be inevitable in the future too!
Simple reason - gap between supply and demand. Oil producing countries are not producing that much oil to meet the global requirement or demand. The result is hike in oil prices globally. Crude oil which used to be around 25-30 dollars per barrel is now selling at 130 dollars per barrel and govt is not in a position to subsidize that much amount. Moreover, the previous NDA govt. had linked the domestic oil prices with that of the international prices. As such any global oil price rise is bound to affect domestic prices. So who is shedding tears now?
India doesn't have natural oil reserves. We need to buy Oil and Gas from OPEC (Organisation of Petroleum Exporting Countries). OPEC is the organisation which controls the production and pricing of oil. If OPEC increases the price per barrerl of oil, the burden falls on all importing nations because they have to naturally pass on the burdens to the end user. In India, government controls the prices of oil and gas to protect the end consumer so as not to expose them fully to the vagaries of price fluctuations. Now, we have reached a stage where the Oil Companies which buy oil on behalf of government cannot bear the burden of entire price hike. These companies are almost on the verge of losses due to the global increase. At this stage, Government thought it fit to hike to prices of petrol, diesel and LPG to a small extent. Also, some State Governments have come forward to absorb the price hike to protect the interest of the consumers. There was no other option for the government.
The fuel hike is not only in India but also has accrued in other countries.The oil industries in the middle west are rapidly loosing their sources of oil. You can also say there is a fuel crises around the world. If you compare the economy of India to other developed countries like USA,UK,Australia,etc the financial condition of those countries is much more than India and they have demostric supply to tackle the problem. Due to this difference the countries like USA and UK can buy the last depleting fuel, where as countries like India who can not put a lot of of money to buy petrol, diesel , have little quantity of fuel to supply the country. in addition to this the the usage in India is ever increasing with large number of private vehicles, trucks etc and a many many new gas connections. And only way to supply the country is to raise the fuel prices so that only the people who have enough money or people who get enough of income can buy the fuels. Increase in prices should make people to minimize the usage.
International market the crude oil prices are increasing very high and in India most of our oil comes from outside. On the other hand government gives subsidy on the diesel , petrol and LPG . To come over the loss of all state run oil companies government had increased the prices in open market.In India. Central Government is still giving subsidy to these companies to control the prices of oil but how much can the government control the prices when there is energy scarcity globally. If government removes the subsidy the rates would have been too high much by now. Even today, international rates are high and central government is paying subsidy to decrease the price of demostric supply. Otherwise, LPG itself will cost Rs.600 or more and petrol would have been dearer. Another reason for high rates of oil in India is due to the Taxes levied by various State Governments.
Some countries have become almost totally dependent on income from oil. What happens to economies and social structures which have been built largely or almost entirely on the base of a nonrenewable resources like oil? This is the situation of the Persian Gulf countries of Kuwait, Saudi Arabia, Iraq, Qatar, the United Arab Emirates, Bahrain, and Oman. Iran and Venezuela, with modest agricultural bases, are not quite so dependent on oil, although both countries get most of their foreign exchange from the sale of oil. Elsewhere, both Libya and Brunei are almost totally oil-dependent. The crisis in these countries have also a direct effect on the prices of oil - both political and economical.
On the other hand USA has captured the oil sources of Iraq and want to control the global oil market which has affected other gulf states and as the result of this situation the gulf countries are in a state of constant fear.
So they also have increased their price as they are main suppliers in the world today.
Iraq used to produce 83% of the crude and the renaming countries combined only could manage 17% of the world's total oil production. . America's interests was never in Saddam or Osama but they were just after the crude reserves in these countries .This was the main reason for attacking Afghanistan and Iraq. LME (london metals exchange) regulates the metal prices worldwide and America regulates the crude prices in the world today. America is vary of the growing economic boom in India and knows very well that India can be stopped only by controlling crude prices. One of the main reason for Inflation in India can be directly linked to the petrol prices and rising dollar value due to the high demand for crude oil. , Nothing can any government do about it but meet the domestric requirement compulsions. The sad fact is that we are simply importing our inflation in the form of oil and giving it cheaply through subsidies.. The subsidies are the main reason for the rising inflation. Inflation is the bigger devil than the price raise.
Who should take the blame?
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