Oil surged to record highs above $78

Burning Fuel:

The crude prices have surged further! A news that has become
the talk of the household in India and is in everybody's lips
everywhere in the world.

The causes are attributed to

1) The West Asian Crisis that is bleeding after the Victory
of Hamas in Palestinian Polls,

2) The ambitions of United States over Iran and

3) Several unimportant issues as the Nigerian Crisis.

Impact on the world:

Crude oil prices are expected to rise to a three digit
further and it is not far in sight. But if an analysis of the impact
is made, it can be found that the worst hit is the developing
nations such as India and China.

This is because the developed nations have the ability to
bear the impact that is created by their own ambitions (The United
States) or atleast have control over it. The under developed nations
need not be worried because this is only one of the reasons that is
keeping them backward and it is only an addition of woes.

The one who is terribly affected are the developing nations
that has to bear the impact for a cause that is in no way related to
them except that they are the fellow beings of the world.

Impact on economy:

India is one of the nations whose consumption of petroleum
products is rocketing every year.A rise in crude prices means a rise
in prices of petroleum products. It has a direct impact on the
prices of essential commodities and hence a rise in inflation. The
factors are so complicated but interrelated. The ultimate reason
attributed however is the rise in prices of fuel.

Central Government vs. Oil Prices

The ex refinery costs of Petroleum is said to be only
Rs18.50.But the price paid for a litre of petrol is Rs.50(approx) in
India thanks to the taxes that have been levied. Even though the
Central Government is not reform oriented (the result of being a
coalition) and has not pushed for reforms seriously, it has brought
a little of it by reducing the subsidy on petroleum drastically. The
ultimate loser is the common man.

A Government is for the people and when it is necessary the
reforms have to take a reverse track. It is unfortunate that the
Central Government (the real benefitter of the price hike)is
reluctant either in reducing the taxes or in rising the subsidy.

Remedy:

Hope for the best (disaster)!

Possible solutions:

India is one of the nations whose importance in the world is
beyond question. India can bring the developing nations together and
the developing nations should have a say in every activity in the
world. The WTO conference is an indication.

The common man should be spared of price hike that is taking
place often. The government should drop the attitude of raising the
prices for every 5 dollar hike in a barrel of crude. (Interestingly
a barrel of crude oil contains 79 litres but we are charged at
almost a barrel of crude for a litre.)
M.V.Balaji Arunkumar and amit


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