The Crude Oil Crisis : Who Is To Blame?

2 Responses

The latest chain of events that has shaken the economies of the world is the rising price of crude oil. Just recently it touched the $135 mark. Who knows, it may even cross the $200 mark by the end of the year, if this trend continues. Various questions have been raised about the same all over the world, and as usual, the blame game starts. The oil corps blame the Middle East, and the Middle East blames the rising dollar. But the questions is, the common man blames whom?

The Scenario

Crude oil prices suddenly accelerated their upward journey and within no time touched the 135 dollar mark. Suddenly, the prises of commodities and services that depend on fossil fuels rose sharply. For instance, air travel became costlier owing to high prices of ATF. All this in turn triggered a rise in inflation.

How Did It Happen?

Frankly, even I don't know what went wrong, as I'm no business analyst. Some people say, the rise of the dollar, some say the oil companies are upto their old tricks, while some say, this is the handiwork of the US. But no one has a convincing answer for this question.

What's Going On In India?

Thankfully, the prices of petrol or diesel haven't increased, thanks to Union Oil Ministry. But this has had a huge negative impact on the oil companies. For instance, the Indian Oil Corporation reported around Rs.414 crores in losses. Just recently, the Finance Minister was planning to include a fuel cess on the income taxes, but since the general elections will be there next year, the government is unwilling to take any chances(I think the elections should be held every year then).

Possible Solution For India

India has plenty of options to curb the rising prices of petrol and diesel. One of the options is to cut the heavy import duty levied on crude oil. Consider this: Petrol is priced at Rs.27 a litre in Pakistan, while in New Delhi, where the fuel price is lowest in India, hovers around Rs.45. So, a reduction in the import duty plus the state octroi charges can bring down, or atleast stabilise the fuel costs. Other options include rationalising supply, subsidised supply of fuel, or to stick on to CNG or LPG.

The Blame Game

As usual, the blame begins. Some oil companies claimed that a 'break' between the supply and demand is one of the reasons for the price rise. While others claim that the Organization of the Petroleum Exporting Countries(OPEC) maybe behind the crisis. And what's more, some even point an accusing finger towards the Bush administration for its stance against Iran.

What I Feel...

As I said earlier, I'm not any sort of an analyst. So what I believe may or may not correct. Anyway, I feel this may be the work of OPEC and the oil companies as well to milk the consumers. Who knows, the oil traders may also be reacting to the 'war' going on in Iraq. Whatever the reason, I think it's time realise the importance of alternate eco-friendly energy sources for not only their eco-friendliness, but also their cost efficiency and abundant presence.

But, What's Your Opinion?

So what do you feel about all this? Who do you think is the culprit, or what's the possible solution? Please leave your comments below...

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2 Responses:

The Fearless Blog on July 20, 2008 at 12:15 PM

I recently wrote a piece on this same issue and much like you I am baffled by the whole thing. The more I research and analyze the stats and intricate details the more confused I become. The cynic in me wants to claim "a conspiracy" by the oil giants in the US and the Middle East AND our own government. The logical and pragmatic me says it's the markets, future expectations, consumption across the world and the "regular folks" lack of interest in alternative energy until our pockets bled to death... Unfortunately, I don't think enough blood has rolled yet and there is more to come. Then you throw in the housing collapse, low US dollar, banks not lending money and many people in debt up to their eyeballs, well what more can I say. We are simply in a "fine" mess and it will take time to find the right size band aid. I don't think there is a "fix" just a temporary hold for all this hemorrhaging.

Great piece.

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