Reason For Hike In Fuel Prices Is Increasing Gap In D/S

Reason For Hike In Fuel Prices Is Increasing Gap In demand and supply (D/S). The difference in demand and supply across the world has given the edge to oil, know how to get relief: Petrol, Diesel Price.

Given the increasing gap in demand and supply of crude oil internationally, its price is not expected to be relieved very soon.

Bank of America and other foreign agencies estimate that the international price of Brent crude will reach $ 70 a barrel by March or April.

It is currently around $ 65 a barrel. Although India purchases crude oil from many markets, the price of crude oil in the country is about three dollars less than Brent.

According to experts, with the increase in the price of crude oil by one dollar per barrel, petrol becomes expensive by 55 paise and diesel by 58 paise per liter.

In such a situation, petrol and diesel prices are not going to be relieved by the state and central government without an effective reduction in their duty.

Reason For Hike In Fuel Prices: Demand is increasing.

The US, China, and India, the world’s three largest consumer countries, are expected to increase crude oil consumption this year.

According to data from the Group of Petroleum Exporting Countries (OPEC), oil consumption in the US will increase by 7.09 percent this year, 8.45 percent in China, and 13.45 percent in India this year.

Crude oil consumption in other countries of Asia is expected to increase by 5.61 percent this year.

The impact of vaccination of the corona epidemic is beginning to be seen worldwide and it has been predicted that life will be normal.

Fearing a shortage in supply, producing countries are planning to cut production so that they can keep the price of crude oil at a beneficial level for themselves.

At the OPEC and Russia meeting on 21 January last, it was decided to cut the supply of oil. OPEC has a meeting in the first week of March in which a decision can be taken again on the production and supply of crude oil.

By the end of March, the supply can be cut up to 77 lakh barrels per day. On the other hand, oil production was affected due to heavy snowfall and power cuts in Texas, the USA last week.

Texas produces about 4 million barrels of crude oil a day. It supplies 40 percent of the US daily oil demand. The situation in Texas has not returned to normal, which has upset the arithmetic of the US oil reserves.

India’s trade deficit will increase.

The rise in the price of crude oil has an adverse effect not only on the pocket of the general consumer but also on the treasury. India depends on imports for about 85 percent of oil needs.

Petroleum products account for the largest share of the country’s import bill. In January this year, India imported $ 41.9 billion, of which petroleum products alone were worth $ 94 million.

Reason For Hike In Fuel Prices: What are the options.

There are only two most suitable ways to avoid the heat of the constantly rising oil price. The first is that the central and state governments should provide relief in this and the second alternative fuel.

The alternative fuel will have to go late and it has started, but the floor is far away.

Experts believe that the effort to promote electric vehicles has started all over the world and in the next three to five years, the share of electric vehicles in the developed countries of the world will exceed 30 percent.

At present, the share of electric vehicles in the total vehicles running on the roads of the country is less than two percent.

The central government is also offering subsidies on purchases to encourage the sale of electric vehicles.  But due to lack of infrastructure related to electric vehicles, the sale of electric vehicles is not catching pace.