Energy prices in doldrums

Energy prices in doldrums
Oil Ministry is haunted by the conflicting thoughts of hike or no hike in the price tag of diesel, domestic LPG and kerosene. Day in and day out, there are rumours of price hike but everything seems to be in limbo unless something concrete and decisive is announced by the ministry. Close on the heels of a 70 paise per liter hike in petrol prices, the Oil Ministry is pushing for an increase in diesel and domestic cooking gas LPG prices, even though it is unsure of political support for the unpopular move with the ruling UPA alliance. More important is the timing of the announcement of price hike. It is said that till the election of the Vice President on August 7, the Oil Ministry will not be able to announce the hike. Soon after that the monsoon session of the Parliament will commence. Though there is no restriction or involvement of propriety in announcing the price hike during the session but once done the opposition in the Parliament is bound to raise hue and cry. The question is that since common man is involved in the matter of price hike, will the UPA Government be able to muster majority support for the price hike in the Parliament? This makes matters more complicated.
Diesel, LPG and kerosene prices have not been raised since June 25 last year even though cost of raw material (crude oil) has spiraled and rupee depreciated against US dollar making imports even more costly.  Our national economy is closely connected to the energy price and our development depends on how far we are able to control energy price. State-owned oil firms currently sell the fuel at a loss of Rs 11.26 a liter while they lose Rs 319 on sale of every 14.2-kg LPG cylinder for domestic consumption. Besides, they are losing Rs 28.56 per liter on kerosene. Now this is somewhat alarming situation and naturally the Oil Ministry has to take steps to meet the challenge. Without a price hike, a staggering Rs 160,000 crore of losses on these fuel sales would have to be met by the Government this fiscal year. The system of announcing price hike of hydrocarbon source is that the Empowered Group of Ministers (EGoM) examines proposals of Oil Ministry and then with its recommendations sends the case to the Cabinet and then the Prime Minister. The Empowered Group of Ministers (EGoM), which is authorised to decide on diesel, LPG and kerosene pricing, has not met since June 25, 2011. The panel was previously headed by Pranab Mukherjee, who last month resigned as Finance Minister to get elected as President of India. After the resignation of Pranab Mukherjee, the EGoM could not meet. Now the Oil Ministry is contemplating sending a price hike proposal to the Cabinet Committee on Economic Affairs (CCEA) and leaving the decision to the Prime Minister.
Oil price is closely connected with world oil market. India is one of the major developing countries importing crude oil. Her own oil reserves are very meager and cannot meet her domestic needs. Though she has expanded oil refining to considerable extent and is also able to export refined oil to other countries yet this does not really support her great need for domestic consumption. The Iran-Pakistan-India (IPI) gas pipeline originating in Iran has not met with much approval in Indian official circles for various reasons. Therefore the expectation that large quantities of gas would be available on cheaper rates from Iranian gas fields has not come true. Now there is some hope of Turkmenistan gas being brought to India through Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline. Though preliminaries of this scheme have been accepted but one is not sure whether it will take off or not. Hydrocarbon energy is of vital importance to the world countries especially the developing countries like India. That is the reason why oil politics is gaining great importance in international relations in this era.  There are only a few spots on the globe where hydrocarbon energy resources are sufficient enough to be explored and exploited and then marketed. The Gulf region is the largest field of storage of hydrocarbon resources. Therefore India has no alternative but to have good relations with oil producing and supplying countries in the Gulf and more lately in Central Asia. Our energy strategy has to be fine-tuned to meet our pressing needs in energy sector.

Follow our WhatsApp channel