Friday, May 30, 2008

Petrol shortage - tough days ahead

The situation is scary. There is every possibility of acute shortage of petrol, diesel and cooking gas. And, it's impact can be frightening. Already in Mumbai petrol bunks have put up "no stock" signs. I don't want to sound like prophet of doom, but we are looking at really tough days ahead. There could be massive queues for filling petrol, tempers could fray... The shortage of fuel can have a cascading effect -- food prices are already up, it could go further up. Vested interests who are looking for an excuse to create trouble might exploit the situation. Have the government and security agencies thought of this dangerous scenario? I have heard of food riots only African countries. (Source: Red Cross)
Why fuel prices are high and rising?
In India, we get petrol, diesel and LPG (liquefied petroleum gas or cooking gas) at a subsidised rate. With the price that we pay, the petroleum companies like Indian Oil, Hindustan Petroleum, Bharat Petroleum, etc will not be able to buy fuel from the international market. They currently sell petrol at a discount of Rs 13.97 a litre and diesel at a discount of Rs 20.97 per litre. They make up this loss with help from the government. This help is not available to private retail outlets. That's one reason, Reliance closed all its 1,432 petrol pumps. The IOC is said to losing Rs 320 crore every day, because of increased global fuel prices.
India is heavily dependent on imports. So, there's little we can do about it. The cost of fuel here will depend directly on the global prices. It's very difficult to pinpoint exactly why the fuel prices are on the rise globally. There is no unanimity among even the experts. Some of the reasons are:
1) Consumption of fuel has increased worldwide, especially among developing countries like India and China. China is expected to overtake the United States and become the largest energy consumer soon after 2010, according to the report's forecasts. In India, where more than 400 million people have no access to electricity, energy demand is expected to more than double by 2030. (Source: New York Times). But the fact is no country consumers as much oil as the United States. (Source: Planet Energies.)
2) The global oil cartel, comprising the OPEC (Organisation of Petroleum Exporting Countries) are manipulating the prices. There were 13 countries. Now Indonesia has decided to pull out. (Source: BBC, Economic Times)  
3) The global production of oil is on the decline. This group says that amount of oil in the earth is finite and of the 65 largest oil producing countries in the world, up to 54 have passed their peak of production and are now in decline, including the USA in 1970/1, Indonesia in 1997, Australia in 2000, the North Sea in 2001, and Mexico in 2004. (Source: Energy Bulletin
What can we do?
You and me can do very little to make any direct impact and remedy the situation. That's why it's all so scary. Our movements are going to get restricted: one, because of fuel shortage, and two, because everything else too is going to become costlier. It's impossible to stop consuming fuel. Perhaps we might be able to reduce by staggering our consumption. But, it will have hardly any real impact to ease the situation, as it is tied to a complex web of external factors.
Over a long term, may be a collective effort by people might have some marginal effect. We all might have to stagger usage. We all might have to cut down on our tendency to zoom off in the motorbike or car to wherever we feel like and for whatever reason.
Increase in oil price and cut in import duty are only temporary measures. They aren't going to sustain us over the long term. For that nationally our dependence on import itself has to be reduced.
There are reports Reliance Petroleum's Jamnagar refinery is getting ready for commercial production by the third quarter this fiscal. The 60-million-tonne export-oriented refinery will pump fuel to world markets including the US and Europe and ease supply crunch. (Source: Economic Times)
We can only keep our fingers crossed, have faith in the knowledgeable technocrats and bureaucrats; and considerate politicians to take the best possible decision that will make our lives comfortable.
I am just going out to get my tank filled, just in case...


  1. I think there is going to be major price hike in fuel prices and the fuel bunks are hoarding fuel.

    We might have to go back to our bike and scooter days and then to cycling.

  2. This was going to happen some day or the other. Common man still has not realized how soon it is happening.
    Nicely compiled post on the issue.

  3. Talking of OPEC, even the Gulf residents seeped in oil as it seems is facing the crunch.. inflation in Kuwait is at its highest and the whole time Consumer Price Index advanced to 127.1 points in the year end to February from 115.4. While inflation was 7.54 in December it is 10.14 now. The only item still cheap (cheaper than the same amount of water) is oil!

  4. The mainstream media almost ignored this until bloggers like you posted news of the shortages. I subscribe to NDTV 24X7 International and they mentioned about how bloggers were talking about this issue. Bloggers help gather and disseminate better news on the ground than any other kind of media. The future of news making and reporting may be through blogs, a rich source of content. Thank you for posting and keeping us in the news about what's going on, on the ground in India.