The most talked about topic for anyone today, be it an employee of the private sector or a cab driver or a vegetable vendor is – rising cost of the petrol and diesel in the country. Everyone is deeply affected by the constantly mounting prices of the oils.
But do you know what are these factors that are responsible for escalating prices?
We will tell you in simple language as to what is up with the prices of petrol and diesel in the country.
Let’s look at today’s prices in metro cities first in comparison to petrol prices right one month back i.e, 24th of August 2018:
|Metro – cities||24th September 2018||24th August 2018|
|Delhi||Rs. 82.72||Rs. 77.67|
|Mumbai||Rs. 90.08||Rs. 85.09|
|Kolkata||Rs. 84.64||Rs. 80.61|
|Chennai||Rs. 85.99||Rs. 80.69|
Can you see the measurable amount of difference? At the rate the prices are going up, the century mark is not far off, especially in Mumbai. Diesel also has the same kind of rate going on.
Reasons why petrol and diesel prices are rising?
Have you heard of the demand-supply relationship and how it affects the economy?
Surely you have. That is the major factor playing in the global market right now. No, not taking the economy class, but to understand this, you need to learn a bit of economics here:
1) West Asia and Venezuela political turmoil
Why does that concern me? You will ask. Well, as we all know India imports around 80% of crude oil from countries like Iran, Iraq, Saudi Arabia, Venezuela, Nigeria and UAE.
The political commotion affects the supply into the receiving countries because the first thing during a political hullabaloo is a ban on export-import.
2) Dictatorship of the US Government
Also, the US has imposed some sanctions that if a country does business with Iran, US will not be involved in any business dealing with that country. India is obviously complying to the threat. On the other hand, Iran too has locked its oil supplies.
Besides this, the soaring breach of rupee against the dollar too is the circumstantial factor in determining oil prices.
3) OPEC countries playing the game of Monopoly
Organization of Petroleum Exporting Countries (OPEC), which is majorly dominated by Saudi Arabia, has reduced the production of crude oil for the last one year.
Why? To simply disrupt the balance of supply and demand and to increase its revenue by benefiting from increased prices as a result.
OPEC anyways charges India more than its fair share even in normal circumstances, all thanks to the constant demand of that 80% of the oil that is never going to reduce.
Because we need it, OPEC takes a leverage of this factor, charging Asian premiums to us.
If we don’t agree to pay the soaring prices, they have nothing to lose, but we do. We will be facing oil-crises pretty soon. Its just like bargaining in the Sarojini nagar market!
Therefore, no matter what the global price is, we always end up paying more.
4) Internal Factors Like Taxes
Whenever the price of crude oil in international market rises, the fuel price automatically hits a new high in India.
Both the Centre and state earn revenues from the supply and they blame each other for the rising prices.
And you know the worst fact of all, even if the crude oil prices in the international market falls, the relief doesn’t get passed along to poor tax-paying janta.
In fact, more taxes are levied in the name of covering fiscal deficits.
Isn’t it infuriating?
5) Oil and petroleum companies
If others aren’t hesitant in affecting the demand and prices of the oil, why would the oil companies stay behind? Don’t they need to earn the profits?
They automatically add ghee, i.e, their own share of profit to the already towering fire of prices and that too goes out of the pocket of poor janta.
But do you know why the dictatorship of these external and internal factors is flourishing with no relief for us?
Because our demand is going to be constant. It is never going to drop.
What we as an individual can do to curb at least some of it?
If we talk about the long-term way out, there is only one factor that can help us reduce the dictatorship of factors like, European countries, or OPEC, or US or Taxes, that is to make our demand elastic.
Meaning, reduce the demand for the petrol and diesel. But how will that happen?
Well, the way out is to use other modes of transport, like electric vehicles (metros), use of public transports (Buses), carpooling, and as a way forward switching to non-petrol ways of transport.
You can also learn to cycle to shorter distance instead of taking out your car every time.
It is not only cheaper but healthier too.
By doing our bit, we can be less dependent on petrol and diesel for our demand of commute. There are already a lot of projects in process to create electricity run vehicles. And hopefully, if something cheaper and better than petrol reaches the market as an alternative of oil, the problem will solve automatically.