This is the news.
Its everywhere. Yes oil is soaring.
The irony of it all is the fact the government of India is still "pondering" on how to diffuse the crisis without impacting the "aam aadmi more than necessary". HELLO! The aam aadmi cant wait to pay Rs 17 odd extra for every litre of petrol. At least, this will make sure that there is petrol available to be bought! The current situation is so bad, that in the very likely event that prices are not raised, IOC, the largest marketer of petro products, will run out of supplies by September, as they cant afford to import any more.
Demand and supply are forces meant to balance each other. In the case of oil, due to gestation period involved in supply, and regular intervening of the governments, this cycle is distorted and takes years before turning around. somebody needs to see that.
It is a shame to see simple economics being defeated with politics time and time again. It is all in the best interest of the nation that prices are allowed to rise and pinch the pockets. It is then that other alternatives will be explored and worked upon to be made feasible. We have pushed it to the point where a crisis is inevitable. Its been like a pressure cooker where the pressure has been allowed to build continuously without any let off and its only waiting to explode. The sooner the heat is taken off the Oil majors, the lesser the impact the aam aadmi will have to face. Mr prime minister, are you listening?
6 comments:
I don't think he is! :D
It's patently ridiculous, this protectionism. Especially for stockholders of IOC like me :-)
Well thats politics for you. Maybe their logic is, a major chunk of farm implements are run through petrol/diesel as well, so the farmer who runs diesel for his tractor (who might or might not have a clue about what global oil prices are) will look at the government as repressive if it raises his basic cost of operations. This will be carried over to food materials and increase their basic cost of produce, that will be passed through the middle men chain to the consumer raising the food price more and pinching the pockets of others. So you have balance food availability, a large number of people's personal wishes, vested interests and the quest for being in power. Gosh Economics is complicated. :) I agree with the market force-demand encouraging innovation but we are not fully capitalistic yet nor do we have a set of people ready to innovate when the time comes so it might not work. Good points made!
Another slight clarification on previous comment.. I DO hope that they raise it.. at least then people will use public transport more and learn how to optimize their vehicle usage..
your point makes perfect sense as there is no prediction of oil prices coming down in the near future...all these subsidies can be handled by the government if only they expect the prices to go back to normal levels and economy back to its high growth track... the government cannot handle these subsidy costs for a long duration..and if they regret and decide to step back on it when the oil is at 200$ a barrel, that will be a ultimate disaster
I think it would be nice to have a new graph showing what has happened to oil over the last six months :Pjavascript:void(0)
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