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The saga of fluctuating oil prices: Every drop is govt’s achievement, hike is blamed on international fluctuations

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By Harshmeet Singh

Right before the recent Delhi elections in February this year, the BJP, boosted by its success in the Lok Sabha elections and the state elections of Maharashtra, Haryana and Jharkhand, went all out to list its achievements in huge billboards across the National Capital and national newspapers. Among its ‘glowing’ achievements was “The Modi Government has been able to reduce the price of petrol by close to Rs 15 per litre!”. While the suggested drop in price was actually real, giving its credit to the Indian Government couldn’t have been any farther from the reality. For a country like India, which imports close to 75% of its crude oil needs, the prices of petrol and diesel are far beyond its control.

Prices of oil in major oil importing nations depend upon the international oil prices. These international prices, in turn, are mostly dependent upon the demand and supply mechanism. Any change in the equilibrium between the demand and supply, either way, can result in significant alterations in the oil prices across the world.

 Then why did the crude oil prices actually drop?

In June 2014, the Brent crude oil was being traded at $115 per barrel. In comparison, the price plummeted to $49 per barrel at the end of January 2015. This sharp drop in price was in stark contrast to the sky rocketing prices since 2010. A number of factors contributed towards the earlier soaring oil prices on the global stage. Countries such as China and India, in order to fuel their growth engines, turned into heavy oil importers, whereas conflict in Iraq meant that the supply of oil in the global market took a major hit. With the demand running higher than the supply, the prices showed a major spike.

Right from 2010 till the mid of 2014, the global oil prices hovered close to $100 per barrel. These high prices forced many companies in the USA and Canada to take up oil exploration in their own countries. The next year saw the major economies in Europe, Asia and the USA slowing down which resulted in weakening demand of oil. A number of newly introduced fuel efficiency features also meant that the demand of oil slowed down and came in line with the supply.

The USA’s success in extraction of Shale Gas has also resulted in a sharp increase in the global oil supply. The US produced close to 2.02 trillion cubic feet of shale gas in 2008, which was a 71% increase from 2007. In 2009, the production grew to 3.11 trillion cubic feet. Picture this – Since 2008, the USA has additionally contributed close to 4 million barrels of crude oil every day to the global market.

Although the production in USA boomed in 2008 itself, its impact wasn’t visible in the global oil market until recently. This was majorly due to the ongoing civil war in Libya and economic sanctions on Iran. These factors, combined with the threat that Iraq was facing from ISIS, meant that over 3 million barrels of crude was taken out from the market every day.

By the end of 2014, these conflicts and sanctions settled down. This resulted in the global oil supply overhauling the demand comprehensively. China and Germany, Asia’s and Europe’s most robust economies for a while, also started to slow down. Resultantly, a huge quantity of oil was stored for later use since there were no buyers. This resulted in crumbling prices in September 2014 (co-incidentally, Narendra Modi took over as the Prime Minister at the end of May 2014!).

With the oil prices crashing down, all eyes were on OPEC (Organization of Petroleum Exporting Countries) to see if they would cut their oil production in order to restore the supply and demand equilibrium in the global market. OPEC is responsible for close to 40% of world’s oil production. When the OPEC countries met last year in November, they decided not to cut down on their production, hoping that USA would bend down on its shale gas production since the prices are crashing down. The USA, on the other hand, had multiple motives behind not cutting down shale gas production. Saudi Arabia, a dominant OPEC member, was against cutting down the production due to its past experience. In 1980s, during a similar fall in prices, Saudi Arabia decided to cut down on its production, and, in turn, lost a considerable market share. And a rather lesser known fact is that Saudi Arabia, with its $750 billion foreign exchange reserve, is capable of handling a few hiccups in order to beat its opponents.

Moreover, it is a well established fact that extraction of shale gas is a much more expensive process than the extraction of oil in countries like Kuwait and Saudi Arabia. But when it comes to deep pockets, there is hardly anyone capable of competing with the USA.

Why didn’t the USA cut down its Shale gas production?

Ever since Russia annexed Crimea from Ukraine, the west, led by the USA, has been at cross-swords with Russia. The USA has also imposed multiple sanctions in order to destabilize the Russian economy. Russia is one of the largest oil producers in the world. Its economy and annual budget, like most of the OPEC nations depend highly on the oil export. The USA, with its booming Shale Gas production is looking to decrease Russia’s share in the global oil markets.

Oil and defence are the two main drivers of the Russian economy. Close of 45% of Russia’s annual budget is funded by Oil export. With the global oil prices plummeting, Russia turned towards its defence deals to ensure that its already slowing economy doesn’t crash. Russia’s defence deals with Pakistan, which were highly objected by India, must be seen in this background. With oil prices coming down continuously, Russia isn’t left with many other options but to look for new buyers of its defence equipments.

How long would the oil prices stay low?

With motor vehicles becoming more efficient with every passing year and very few economies looking at a boom in the coming years, the demand for oil may not rise extensively for quite a while. But a conflict in one of the oil producing countries can surely create a mismatch between the demand and supply of oil. The future global events would drive the oil prices in the coming years.

What fluctuates the Oil price in India?

Oil prices in India are based on the global prices and the taxes levied by the Central and state Government. Different states levy different taxes on Petrol, which is why the petrol rates are different across the country. Goa is well known for selling the cheapest petrol in India. In 2012, Manohar Parrikar, the erstwhile Goa CM, reduced the VAT on petrol from 22% to just 0.1%! This slashed the price of petrol from Rs 65 per litre to Rs 54.96 per litre. Goa is, in fact, the only state where petrol sells cheaper than diesel.

The Central Government, on the other hand, seeing the global oil prices drop, increased the import duty on crude oil to 7.5% from the existing 2.5% in December last year. Interestingly, this was just 2 months before the Central Government was patting its own back for bringing down the oil prices in India!

Recently, the Government hiked the price of petrol by Rs 3.96 per litre and diesel by Rs 2.37 per litre, citing International fluctuations. It is actually amusing to note that the drop in prices is attributed to the Government’s achievement, where as a hike in prices is blamed on international fluctuations!

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Surajpal Singh Amu: A case of Fatwa by Hindus?

BJP's Surajpal Singh Amu announced a reward roughly equivalent to $1.5 million to anyone who would behead Deepika Padukone and the film director Sanjay Leela Bhansali.

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A man signs a banner during a signature campaign as part of a protest against the release of Bollywood movie "Padmavati" in Kolkata, India, Nov. 22, 2017. VOA

A leader of India’s ruling Bharatiya Janata Party (BJP) has announced that he would pay a reward roughly equivalent to $1.5 million to anyone who would behead an Indian actress and a film director.

Surajpal Singh Amu, a member of the BJP in northern Haryana state, is apparently upset about an upcoming movie, Padmavati, starring actress Deepika Padukone as the 14th-century Hindu queen Padmini.

The movie is directed by Sanjay Leela Bhansali.

Amu alleged that the movie is misleading, not based on truth and offends Hindu sentiments in the country.

FILE - Actress Deepika Padukone and director Sanjay Leela Bhansali attend the opening of the 13th annual Marrakech International Film Festival in Marrakech, Nov. 29, 2013.
FILE – Actress Deepika Padukone and director Sanjay Leela Bhansali attend the opening of the 13th annual Marrakech International Film Festival in Marrakech, Nov. 29, 2013. VOA

“We will reward the ones beheading them, with 10 crore rupees, and also take care of their family’s needs,” Amu said in an interview with India’s Asia’s Premier News (ANI) earlier this week.

Threats against movie

Amu also vowed not to allow the release of the movie and warned movie theaters to avoid playing the movie or risk being torched.

The movie was set to be released during the first week of December.

Rights activists have reacted strongly to the threats and urged the government to take action.

“This is pretty outrageous that you announce publicly and no action takes place at a time when people are being arrested for most trivial reasons in this country,” Gotum Naulakha, an Indian-based civil liberties activist, told VOA.

A security guard walks past a poster of the upcoming Bollywood movie "Padmavati" outside a theater in Mumbai, India, Nov. 21, 2017.
A security guard walks past a poster of the upcoming Bollywood movie “Padmavati” outside a theater in Mumbai, India, Nov. 21, 2017. VOA

An official complaint has been registered against Amu, but many are criticizing the stance of the ruling Bharatiya Janata Party — which controls the central government led by Prime Minister Narendra Modi — on the matter.

“I’ve not heard any official stance from the central government or the Ministry of Information and Broadcasting,” Vinod Sharma, an Indian-based analyst, told VOA.

Anil Jain, a local BJP spokesperson, told ANI that the law applies to everyone in the state of Haryana and no one can threaten others. The central government has yet to react, however.

Bollywood actress Padukone stood her ground and said the movie would be released despite the threats.

“Where have we reached as a nation? We have regressed. The only people we are answerable to is the censor board, and I know and I believe that nothing can stop the release of this film,” Padukone told Indo-Asian News Service (IANS) last week.

Controversy

Padmavati was controversial right from the start. Opponents of the movie stormed the filming of one scene and destroyed the film sets. They were upset that the director of the movie was distorting facts by alleging romance between the Hindu queen and the Muslim invader Alauddin Khilji.

Film director Bhansali, however, denies the allegations and maintains the story is based on a Sufi and medieval-era poem written about the Hindu queen. In the poem, the Hindu queen chooses death before the Muslim conqueror could capture her.

Some experts say the poem is centuries old and there is a possibility the Hindu queen might be purely a fictional character found only in folklore.

“There’s a lot of debate in India whether Padmavati was actually a living being many, many years ago or whether she was just an imagined person in a poem,” analyst Sharma said.

Rights activists maintain that if government fails to draw clear lines around the threat made by the politician, and discourage a growing sense of impunity for some, incidents like this will only increase and threaten the freedom of expression in the world’s biggest democracy.

“By letting loose and giving [a] sense of impunity to the goons of the ruling party or people who’re connected or close to the ruling party, we’re paving the ground for much bigger and [worse] things to happen in the near future,” Naulakha told VOA.

The movie is awaiting approval from India’s Central Board of Film Certification.

Written by Madeeha Anwar of VOA.

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Cleaning of Ganga is not impossible, but it is very difficult.

The holy river is also one of the most polluted river

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A pile of garbage lies on the riverbank along the Ganges riverfront known as "Har ki Pauri," the most sacred spot in the Hindu holy town of Haridwar where devotees throng. VOA

– Saket Suman

About five years ago, when Financial Times journalist and author Victor Mallet began living in Delhi, he was shocked to discover that the Yamuna — “this beautiful river of Indian legend and art” — was chocked with untreated sewage and industrial waste after it had passed through the city on its way to Mathura, Agra and on to join the Ganga at Allahabad He wondered “how a river so sacred to so many Indians could also be so polluted and neglected” and then set out to record the plight of the Ganga.

His exhaustive journey led him to various key locations on the river, including its source at Gaumukh and Sagar Island and the Sunderbans at its mouth in the Bay of Bengal. This culminated in the publication of “River of Life, River of Death” (Oxford University Press/Rs 550/316 pages).

“My conclusion is that it is not impossible (to clean the Ganga) — but it is very difficult. Narendra Modi is the latest of several Indian prime ministers to announce plans to rescue the Ganga — in fact, I would say he has been the most fervent — but like his predecessors, he has struggled to implement these plans despite the availability of funds from India itself and from international donors such as the World Bank and Japan.

“Clearly, the Ganga has enormous problems of physical pollution from sewage, industrial toxins and pesticide run-off. Too much of the water is diverted for irrigation in the dry season, which can leave parts of the river without water before the monsoon. But with political will and public support — I don’t think anyone in India objects to saving the river — it can be done,” Mallet told IANS in an email interview from Hong Kong.

The important thing, he maintained, is to change mindsets and he noted in this context that it is quite common among devout Hindus to say: “Ma Ganga is so spiritually pure that nothing we throw in the river will sully her or make a difference.”

The author said that sensible holy men and environmentalists who care for the Ganga term this as nonsense — and the reason it’s not true is that the Ganga’s very spiritual power arises from its physical properties as a life-giver, as a provider of water and fertility.

“That’s why rivers have always been worshipped in ancient times, including in England. So if you destroy the river’s life-giving qualities through pollution, you destroy the source of her spiritual importance,” he added.

In the book, he also states that it is not impossible to clean the Ganges, “as river clean-ups in Europe and America have shown”.

Elaborating on this, he said: “When I was a child living in London, my mother always told me not to fall in the Thames because the river was so filthy that if I fell in I would have to go to hospital and have my stomach pumped! Yet today the Thames is clean — muddy, but virtually free of industrial pollution and untreated sewage — because successive governments and water and sanitation companies have stopped the pollution.

“The same is true of the Rhine in continental Europe and the Chicago river in the United States. The great thing about rivers is that you don’t have to scrub them clean — you just have to stop polluting them and the natural flow of the river does the rest.”

Mallet maintained that the record on the Ganga has so far been disappointing in terms of implementation, but hoped that there will be a change now that there is a new minister in charge.

“If you clean the Ganga by improving sanitation, you not only save the goddess, you also create thousands of jobs in infrastructure development, and save the lives of thousands of children who die each year because of bad water, poor hygiene and stomach bugs. Likewise, if India curbs its greenhouse gases — and this seems to be happening anyway because alternative energy such as solar power is now very competitive on price — then that will also help it to reduce the kind of air pollution that has recently been afflicting Delhi and the whole of North India,” he maintained.

Mallet went on to add that he learnt a lot about the mythology and the history of the river — and the history of India — in the course of his research for the book.

“In a way, India is so rich in civilisations and stories that you can never say you have completed your work as a researcher and writer. You can at least make a start, and also explain the contemporary political, social, religious and environmental issues that affect the river and the country as a whole,” Mallet said. (IANS)

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Will India be able to travel in the Bullet Train Soon? Yes, Say Railway Officials; Indian Railways Target Completing the Project Before the August 2022 Deadline

The foundation stone for the Rs 1.08 lakh crore ($17 billion) 508-km Ahmedabad-Mumbai Bullet Train was laid in Ahmedabad by Modi and his Japanese counterpart Shinzo Abe on September 14

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Railway Board Chairman held a high-level meeting in Rail Bhavan last Thursday which was attended by Japanese Ambassador Kenji Hiramatsu, and Niti Aayog Vice Chairman. (representative image) Wikimedia

New Delhi, November 10, 2017 : Unfazed by opposition criticism, Indian Railways is working overtime to push ahead with the much-talked about the “Bullet Train” project, aiming to complete it ahead of the August 2022 deadline set by Prime Minister Narendra Modi.

Railway Board Chairman Ashwani Lohani, who has a reputation of a turnaround man, has taken up the task of monitoring and chairing the periodic review meetings of the project that is estimated to cost over Rs 1 lakh crore ($15 billion).

Lohani held a high-level meeting in Rail Bhavan last Thursday which was attended by Japanese Ambassador Kenji Hiramatsu, Niti Aayog Vice Chairman Rajiv Kumar, Central government officials, Principal Secretary-rank officials of Gujarat and Maharashtra, officials of NHSRCL (National High Speed Rail Corporation Limited), officials of Japan International Cooperation Agency (JICA) and the General Manager of Western Railway.

A senior railway board member, requesting anonymity, told IANS, “The railways is in no mood to delay the Mumbai-Ahmedabad Bullet Train project. Lohani will now hold a review meeting once every three months… And even on weekly basis, if required.”

Emphasising on the government’s intention, the official said, “The attendance of the Niti Aayog Vice Chairman, the Japanese Ambassador and the CRB in the review meeting is a clear signal that the government is taking the project seriously and there is no scope for any delay.”

“The CRB wants Indian Railway officials to take lessons from their Japanese counterparts about meeting deadlines,” he said.

The opposition has attacked the government for taking up a project at a huge cost instead of focusing on safety, a dire need of the time, and on schemes to improve passenger amenities.

The official said it was also decided at the meeting that “a road map for consultancy and civil engineering works will be prepared by January 2018”.

A ministry official associated with the Bullet Train project said a report on the signalling system and electrical reports would be ready by April 2018. According to him, the tracks and most of the signalling system would be brought from Japan.

The foundation stone for the Rs 1.08 lakh crore ($17 billion) 508-km Ahmedabad-Mumbai Bullet Train was laid in Ahmedabad by Modi and his Japanese counterpart Shinzo Abe on September 14.

Of the Rs 1.08 lakh crore, Japan is giving a loan of Rs 88,000 crore at a minimal interest of 0.1 per cent for 50 years. And the repayment will begin only after 15 years.

The railway official said that to encourage the Prime Minister’s ambitious ‘Make in India’ programme, “an appeal will be made to Indian and Japanese companies to make use the opportunity to work together”.

Meanwhile, the officials of the government of Maharashtra and Gujarat assured the railways of their help in land acquisition and smooth shifting of raw materials to construction venues.

A three-level monitoring committee was also constituted, including the Vice Chairman of Niti Ayog and Special Advisor to Japanese Prime Minister.

A working group led by Managing Director of NHSRCL Achal Khare and consisting of representatives of the ministries concerned, and the representative of JICA, has been formed. Besides the two committees, a technical expert committee led by the Managing Director of NHSRCL has also been formed.

Of the 508 km stretch, 92 per cent (468 km) of the route will be elevated, six per cent (27 km) will be in tunnels and the remaining two per cent (13 km) will be on the ground .

The high-speed train would also pass through the country’s longest tunnel of 21 km, of which seven km will be under the sea.

Twelve stations have been proposed that include Mumbai, Thane, Virar, Boisar, Vapi, Bilimora, Surat, Bharuch, Vadodara, Anand, Ahmedabad and Sabarmati.

The distance will be covered in two hours and seven minutes if the train stops at four stations — Ahmedabad, Vadodara, Surat and Mumbai. If the train stops at all 12 stations, it will cover the distance in two hours and fifty-eight minutes.

According to Railway Ministry officials, the operating speed of the bullet train would be 320 kmph and the maximum speed would be 350 kmph.

 

(Editorial note : This article has been written by Anand K. Singh and was first published by IANS. Anand can be contacted at can be contacted at anand.s@ians.in)