Why Petrol is so costly?

Why Petrol is so costly?

KARTIKEYA SEMWAL

DEHRADUN, MAY 26, 2012:

Petrol is such an important article of human use, that without it life could come to a standstill. Industries could cease to exist and economies could collapse. Prices of petrol are affordable for public in other countries but in India, it’s a completely different story. Poor people can’t even think of using it. And now with prices touching Rs.74/litre, even the middle class wouldn’t be able to afford it for long. Yet MPs and MLAs and politicians of ruling party at the centre government have the facility of using as much petrol as possible for free. Infact they get a petrol allowance for it. The question is, why should only general public bear the brunt of petrol price hike? Why not the MPs and MLAs be made to pay the price of petrol that they and their families use for free? Why are they given petrol allowance when they are paid monthly wages of lakhs?

 With increase of Rs.20 in the last 3 years, Congress led UPA-2 has been really pinching the common man hard. The Indian population of about 1.5 billion should for once question the centre government, why are they in power if they can’t control inflation and petrol prices. Everyone has been talking about rise in petrol prices but no one has given it a thought as to why such a sudden price rise? There are multiple reasons and we are going to discuss some of them here.

The first reason is reduction in import of oil from Iran by India. We all know US has been trying to isolate and Iran over its Uranium enrichment programme for which it has asked countries all over the world to reduce their oil import dependency on Iran. India is one of those affected countries. India did reduce its oil import from Iran by up to 22%. But US hasn’t provided India with an option to replace Iran with some other country for cheap oil import.

The second reason is increasing number of two wheelers and four wheelers on roads due to boom in the automobile industry. More cars and bikes means more and faster use of petrol. This has resulted in more demand and less supply.  

The third reason is inflation which is rising with every passing day. Due to this, everything is getting costly and since petrol is the basic requirement, its prices have increased the most and the fastest.

The fourth reason is weakening Rupee against the dollar. The last time rupee fell against the dollar was in 2008 when Rupee traded at 53/dollar. And everyone knows that India does most of its business tradings in dollars. Infact many countries do that as dollar is considered as an international trade currency. And as we know, India does its oil imports in dollars and so its obvious that if rupee falls, the oil would cost more.

Now what needs to be done is addressing all these four issues jointly. India should either ask the US to provide it with cheap oil imports itself or search in African and Latin America countries with some allies to replace Iran as oil exporting country. Dominican Republic, Cuba, Puerto Rico and Venezuela are a few Latin American countries from whom India could import oil.

The next reason is making cars and bikes costlier and putting a cap on companies to limit their car and bike sale in the Indian market. If the supply is limited, the demand for oil would come down itself. Then there is inflation, which can be controlled only if industrial output is increased and importance is laid on boosting the agricultural sector. Providing better pay for raw materials and limiting the price of finished products.

The last thing to dos is strengthening the rupee by improving its status against the dollar. If these four measures are taken simultaneously, it would surely bring down inflation as well as hike in petrol prices. These steps would also help the country’s economy to rebound and start making progress at around 10-12% every year.