Tag: price of oil

Petrol price hike unjustified

Petrol price has gone up once again. There is no good reason for the hike. It is a myth that oil marketing companies decide the hike. When there were elections in four states and one union territory petrol price did not go up. The hike happened after voting was over. That time LPG price also went up.

The government says hike is inevitable because of increase in price of oil in international market. When the price comes down in international market petrol, diesel or LPG price does not come down. Then it is said there is subsidy for diesel, kerosene and LPG. The government’s manipulation of exchange rate has resulted in rupee being weak and common people having to pay a high price. When rupee appreciates against dollar the government buys dollars and keeps the value of rupee down. When rupee depreciates the government does not sell dollars and keep the value of rupee. It is done to favour exporters at the cost of 121 crore Indians.

USA prints about a trillion dollars every year and dumps them in the market. That should have brought down the value of dollar. However India has printed notes and when USA goes down India goes down even further. If India had not manipulated currency the prices of petrol, diesel, kerosene and LPG would have been about one tenth of what they are today.

PM Manmohan Singh he does not have a magic wand. You don’t need a magic wand. You have to do the right thing. DMK, NCP and TMC opposed price hike but no one has talked of currency manipulation that is the root of the problem.

Fuel Price Hike

On 25/6/2010 the government of India increased prices of petrol by Rs.3.50, diesel by Rs.2/- kerosene by Rs.3/- per litre and LPG by Rs.35/-per cylinder. Petrol and diesel prices were decontrolled.

The increase has come at a time when food price inflation is about 18%.

The increase was avoidable. For the week ended 18/6/2010 foreign exchange reserves increased by $3 billion. If the government had not increased foreign exchange reserves the dollar value would have gone down making oil import cost less and there would have been no need for price increase.

Now also the price increase can be reversed if the government sells $3 billion. That will increase the value of rupee against dollar. Whenever the price of oil goes up government can sell dollars and rupee appreciates and there is no need of price rice. India has enough foreign exchange reserves.

Oil is a finite commodity. We have to use solar and wind power. Oil prices are likely to go up and any accident like that of BP oil leak in the Gulf of Mexico will have far reaching consequences.

The government does not have to run oil marketing companies. Some years ago there was an attempt to privatise them. Vested interests opposed that.

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