While all Indians are silent on the rapid increasing prices and the opposition as well not creating any attention towards the increasing prices of oil and petroleum products although the price of crude oil in the international market has gone down from $147 per barrel to $61.52 per barrel, still, it seems that the price of petrol and diesel are not reducing, why is this happening, is there a conspiracy of government in power? Or are there some genuine factors involved in the price-determining factors?
We all know that behind every event there are many factors at work and we often do not completely understand the reasons and often just look and judge the conditions based on the outcome of the event which according to me is an injustice to the detailed study done by the intellectual bureaucrats at the higher policy framework level, now one by one let us try to see what are the factors working in increasing the price of petrol and diesel products across the nations and the case is not just with India slowly but definitely, all the other countries and govt will come aboard when they feel a similar heat from the OPEC (Organization of the Petroleum Exporting Countries) which is the biggest internationally accepted form of a cartel of 13 closed group of countries which orchestrate and make the decisions regarding oil which is an essential fuel. Now, let us look closely at the events that have unraveled in the past few years
22-Apr-2019 WASHINGTON: The US on Monday is set to ask five nations, including India and China, to completely end their imports of Iranian oil or be subject to US sanctions (Economic Times)
15-Sep-2020 NEW DELHI (Reuters) - A new fire broke out on a supertanker carrying about 2 million barrels of oil in the Indian Ocean off the east coast of Sri Lanka, spokesmen for the country's navy said on Thursday, adding that one of its 23 crew was missing and another injured. (reuters.com)
16-Dec-2020 NEW DELHI (Reuters) - India’s foreign ministry said on Monday that 20 of its nationals had been kidnapped from an oil tanker in West African waters, where piracy has been on the rise
Having seen a couple of major incidents which have seriously effected out policy and price index in context of the power, oil and its consumption and distribution, the Modi govt in this light has tapped into the untapped power that behavioral economics holds, the hint was given by the govt in its economics survey of the Financial year 2018-2019 chapter 2 (Economic Survey 2018-19 Volume 1 incentivize good behavior), while the govt gave a soft indication that it may use this methodology to tap into changing the preference of general public in wide view and how else is this going to happen rather than by giving pain (in psychological terms reducing the levels of dopamine and inducing pain when a certain task is performed), govt is increasing the prices of all the items which are being imported and not made in India to promote the use of less used and cheaper Indian made alternatives in these cases, though we do not have any alternative of fuel we still need to find one, in such case I distinctively remember the speech given by Mr Nitin Gadkari (Road transport minister)
23 November 2019Nagpur: Union
transport minister Nitin Gadkari, who is known to be a strong proponent of
alternate fuels, said that he is working on a project to make aviation turbine
fuel (ATF) out of bamboo oil.
“When I say this in Delhi circles, they think I am crazy. But NEERI is working
on a project to extract oil from bamboo. As much as 40% oil can be extracted
from bamboo, and it can be processed to make the fuel that is used in
aircraft,” said Gadkari, on Friday, after he inaugurated Agrovision — the
annual exhibition for farmers patronized by him.
The NEERI
report will be out soon, said Gadkari. “I strongly believe that continuing with
traditional crops like cotton, soybean, or even paddy and wheat is not going to
help the farmers much. Rates of crops like cotton depend on the market conditions, and there is already a surplus of food crops like paddy or wheat. Alternative sources of fuel can be the future. Bamboo can even be grown on the farms’
edges,” he said.
Indian Air Force (IAF) has already flown a jet and a helicopter on biofuel made
out of jatropha seeds. Non-edible oilseeds can be a major source of biofuel,
thus benefiting the farmers. “When those from two major automobile companies —
Bajaj and TVS — came to meet me, I said, Do not expect anything from me till
you come up with two-wheelers running on alternate fuels. Now, TVS has launched
a motorcycle running on biofuel, which is on display at the event,” he said
Tough Mr Gadkari was successful in many aspects and looks forward to implementing such standards in many other sectors where the use of fuel will be reduced in the next few years through a painful but efficient process of change in the behavior of people and making them use the alternative instead of the regular imported fuel.
This behavioral change will take a long time and during this time no relief will be provided to any group of owners, and besides this change is proved to be sweet for the govt as well as oil processing agencies as an increase in oil prices is serving these industries well, it's just the profit before the whole earning from this particular may stop or say get in negative.
The potential of behavioral economics is being used in these recovering times of COVID COVID-induced market times, as this is the best time to convince the aam aadmi by giving them various valid and logical reasons.
Advantages and limitations
While there are always two kinds of effects of every action, there are a few advantages to this as well.
1. The very first advantage is that due to increased rates many Indian will start using no fuel or fuel alternative arrangements to travel which can include public transport and mechanical transportation facilities where fuel is not the driving force like a cycle, bullock-kart, etc by using this there is a different unorganised sector which will be benefited from it, like the cycle (hero bicycles had to close down now with this we can expect it to reopen) which not only reduces pollution but also uplifts the idea of swasth bharat shreasth bharat (healthy India and superior India).
2. Increased oil rates and artificially induced demand for electric bikes and non-fuel using transportation will increase, forcing the companies to devise a solution to fulfill these demands, hence making scope for innovation.
3. This will also help the Modi-led government to achieve its promise of reducing oil dependency of India on the cartel organizations and falling prey to their dirty tactics.
4. Due to reduced dependency on oil from other nations, India will be free of the threats from developed countries like the USA, which imposed sanctions on us when we buy oil from a specific nation, by doing so they disturb the harmony and balance between the nations which may further create unrest but with less import of oil, these problems shall also reduce.
5. Reducing dependency also means that there will be an alternative, which will be mostly eco-friendly, due to the increasing and alarming situation of the environment of this nation.
Limitation
While we have successfully seen the long-term effects, which can be possible advantages of the increased oil rates for now, there are some repercussions we would need to face in the short term, and these won’t come at an easy cost.
1. Cascading effect: there shall be a cascading effect of increased petrol prices on all the daily, essential items of our lifestyle as every such commodity comes via some or other mode of transportation with an increase in fuel prices the burden of transportation has fallen on the producers and this will be indirectly shifted to the consumers. This means, in the short term (at least till the fuel prices don’t go down), we would have to pay an extra amount for all the essential commodities
2. Reducing import bills by changing the behavior of the masses may cost lives, as many individuals who earn on these lines may lose their only source of income. To reduce the oil bill imports, a large chunk of oil imports will also be under the scanner. The prices of oil have also increased due to the imposition of taxes on imports in the budget. The palm oil we have been importing from Indonesia all these years has now become costly due to various factors.
3. The palm oil import reduction may open doors for the Indian farmers but in the short-run, due to an increase in these essential items we would be creating a situation that could lead our lower rucks of the population to starve and in many cases opt for suicide (history supports this during the Ind-Pak war or 1971 there was an essential shortage which led to many deaths related to starvation due to unavailability or high prices of cooking oil).
4. In the shorter run, we may also create a situation where people may explore or exploit the situation by smuggling/forgery/cheating/illegal mixture of oils, which may lead to a similar situation that we had in the year 1998, Argemone adulteration Dropsy case. Where more than 60 people died and 3000 got sick in Delhi alone, those were the days when things dint spread faster but, in the world, where we live the reach ability of these companies are much high and in such a time the death toll can raise to 600 and sick can also increase by a more significant amount.
Do we have a solution?
Well when history has shown us the problem before it has also given us lessons to create solutions in that direction, while this is nothing new but it looks like project “Dhara” which was launched in23 August 1988, and it was successful for a long time but by the mid-1990s, the tide began to turn in favour of imported oil seeds backed by events like a trade agreement signed with the World Trade Organization (WTO) in 1994 and the controversial purchase of one million tonnes of soybean seeds consignment in 1998 from the United States. And the deaths and sick cases in the preceding years made the conditions even worse. As a result of this case, all domestic brands selling mustard oil suffered immensely, while the government issued a ban on loose mustard oil. The NDDB also had to put advertisements asking consumers not to buy their Dhara Mustard Oil.
While many industry insiders believe that this was a deliberated conspiracy to denigrate and maligning Indian oil seen company and make India dependent on imported oils, while the palm is not native to India it creates a lot of health hazards (who knows maybe this is also a contributing factor in India being the world diabetic capital?)
The solutions lie in history; the government can revamp the Dhara oil and the NDBB (National Dairy Development Board)
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