The great Indian fuel price bait and switch
The above chart is not the Indian petrol price chart.
In June this year, the Congress led UPA government raised petrol prices by Rs 5, Diesel by Rs 3, and LPG (Cooking gas) by Rs 50-150. This was on the grounds that crude was at $150 / barrel. In response, everything from autorickshaw fares, bus fares, restaurant food prices, lorry load charges, shot up. The conditions under which this specific hike was thrust on a nation already struggling with inflation have long ceased to exist.
For the past two months, crude has been below $70-$90. Now, it has stabilized below $50 (todays price $48). Gas prices have fallen around the world in response. Yet in India, a billion people are being robbed blind, economic activity is being suppressed by this artificially high variable cost, everyone wants a bit of the windfall enjoyed by the oil companies ( there is a even a proposal to hike the excise on fuel).
ON BOARD PM’S SPECIAL AIRCRAFT: Prime Minister Manmohan Singh appeared to rule out cutting prices of petrol and diesel till oil companies stop making losses on fuel sales.
Contending that there were “limits to which government can go on subsidising”, Singh said it will wait till oil companies stop making losses before considering cutting petrol and diesel prices.
“When we see that the Indian oil companies are able to sustain a reduction, that will be the right (time for such a) decision,” Singh told reporters late Monday night on way back to New Delhi from his three-day maiden visit to energy rich Gulf countries.
Dr Manmohan Singh in a recent interview
Dr Singh, I think what you meant to say was, “……. when we see that Indian oil marketing companies are able to sustain a reduction – or we have elections, whichever happens first, will be the right time to take this decision”. We desis all know that this is simply a case of building up the books of the oil marketing companies in preparation for a cut near the elections. Free markets anyone ?
There are some who are claiming that the oil marketing companies are still losing on diesel. Can the oil companies make a profit on diesel ? If you make a profit on a subsidized item, can it still be called a subsidy ? If you make a 5 Re profit and petrol and 20 paise loss on diesel, it means you have made a net profit of 4.80 despite the cross subsidy. This is a fake argument.
There are still a few “free agent” voters who might be charmed by an election time price cut. As this blog has been saying – the locked-in voters do not give a rats ass about inflation or fuel prices or terrorism or 6 hour power cuts – they simply vote for their leader who protects their exclusive benefits from examination. Like any rational person would.
Blog note : Regular activity will resume on this blog. I took a break for a while, then had a tough time locating my password. Finally tracked it down.