TIME TO ROLL BACK PETROLEUM PRICES

TIME TO ROLL BACK PETROLEUM PRICES

by:S.K.SARDA
President: Sikkim Chamber of Commerce

The sharp decline in crude oil prices is good news for India.
India’s trade deficit has grown to a worrisome level because of a rise in the oil import bill. And government finances, too, are under strain because of fuel subsidies. So, the recent drop in global crude oil prices should give the economy some breathing space on both fronts.

The underlying cause of lower oil prices is weak demand, as less fuel is burnt in a slowing global economy.

The Crude Oil prices which were hovering at $ 70 per barrel, a year back suddenly started its uptrend to $ 90 in Jan this year and then speeded up to $ 147 on 11th July 2008. Economic forecaster then put the price end December at $ 200 per barrel.

But luck has it; the inflationary pressure put by the rising crude on the prices of raw materials and then on the final consumer prices dampen the demand leading to declining crude prices. The economists now say that the price can head down to $ 90. It is currently at $ 108 per barrel on 3rd Sept 2008.

We all know that in the modern times all products that we consume have a smaller or larger impact of crude prices. Transportation which contributes more than 30% in the product prices is bound to roll up the prices of end product in the hands of consumers.

In the process all suffers- manufacturer, transporter and then finally the consumer. The man sitting at the end of the ladder suffers the worst.

It is, therefore a good news that when the festive season is about to set in soon, crude prices are going down in the international market.

But in India, where the prices are controlled, unless the Government announces the reduction of petroleum prices, the benefit cannot come down to the street.

It is surprising that when the crude prices jumps up, Union Government decides to immdly make it effective on the pockets of consumers, but on the other hand when crude prices decline, their is no rush to reduce the prices. The government thus wants to profiteer and delays the reduction. This is not at all good.

The common man is already suffering from 12.5% inflation. His hard earned money is already eaten up by the rising prices. The festive season is about to come in. It is, therefore, urgent to reduce the prices of petroleum products . Crude oil is already on the downward trend in the international market.

Let us encash it to spread joy on the faces of the unorganized Indian masses who had a difficult time this summer. The Government should not fall into the trap of oil companies, who are out to make profits.