PRESENTED BY :UNITED INDIAN YOUTH(UIY)
A look at Petrol Dependent Economy and consequences and Way out
Since last 15 years the prices of Petrol and diesel jumped by 250%. This translates to an annual growth of 16% every year. The inflation for this period is less than 6%. Every time the prices raised some strikes are done and memorandums are submitted and all forget every thing until next price rise. Common man looses money. Petrol companies are saying they cannot make money and in losses. Government says because of loss petrol companies need to be privatized. Private companies tell that they have to increase prices because international prices are rising because of Iran war. Previously it was Iraq war. What is the root cause of this problem ? Who fixes the prices ? If we cannot stop the price rise what alternate avenues exist for us. India produces more than 10 lakh engineers in the world in various disciplines. Cannot we do some thing ?
Previously for thousands of years all energy needs are met only by coal, wood, dried cow dung etc and other natural process. Night lamps used to use castor oil. The entire economies of at least India or Oriental countries were depended on agricultural products. Farming is done by bullocks. Transportation of goods is done in canals or horse drawn carts. The average speed of such transportation is around 25-35 kilometers. Even thousands of miles sea travel was done by using coal or oil created by compressing coal. Economies are coal based economies. India was net exporter and energy sufficient.
With the discovery of oil which was controlled by British and US petroleum companies the third world was forced to shift to oil based economies from coal based economies. This is the only way the amount spend on energy-transport, lighting, industry-can be shifted to west from all other countries. For this first it was stated is coal and wood burning is polluting atmosphere. What is not told was coal burning was there for thousands of year with no documented health effects. Oil was sold as pure clean energy. Once countries started using oil the pollution went through roof and many lung and heart diseases started coming. This helped only medical companies in selling more medicines. Agricultural energy was replaced with hydro electrical energy. Huge dams etc made terrific money for contractors.
First of how the price of oil is supposed to be fixed ? Except the bore well costs oil cost nothing. It is a free national resource. It is extracted and distributed. Until 1973 the cost of oil was a barrel $ 13- $ 20 dollars. In those days oil extraction distribution and wholesale are all done by single companies. There was a catch. Any payment for oil has to be done in US dollars only. This way every country that wanted oil wanted dollars. US is the only country that produced dollars. More dollars demanded more good for American economy.
From 1971 MNC oil companies divided the oil business in to extraction, transportation, and distribution. Each separate entities added their own profit. This made oil prices jacked up by a factor of 3 300% raise in oil prices. 300% rise in the dollar demand. Who ever opposed this were treated as terrorist nations and world plunged in to end less wars. Iraq demanded money for oil in Euros it was attacked. Iran created barter or gold based oil bourse it was about to be attacked. This extra profit is not part of oil cost. But it is to make more money by same companies by dividing their operations.
Then entered speculation in oil trade. From the time the oil tanker leaves middle east ports till it reaches New York or Houston in USA traders will take options on the tankers. This is like cricket betting, or political betting. This jacks up oil prices by another $ 20 to $ 30 per barrel. At this prices the oil is offered to all third world countries. This speculation is the cause of rise of oil prices internationally.
Crude Oil Quality
Oil from which Petrol or diesel is derived is not homogeneous product and its quality differs from country to country. We mostly get Iran oil and it is purified to make petrol or diesel.
During 1971 war there was only private oil business in India. During the war the Private Oil companies refused to supply oil to Indian army stating that there should be no war as war is bad to business. During that time oil companies were nationalized in India. India made great leaps in developing oil refineries for Indian purposes. Indians specialize in oil refining suitable for Iranian crude oil. If pressure is kept on India for importing Saudi oil then we have to invest billions of dollars in modifying refineries which takes the Petrol prices to close to Rs 150 per liter.
Since 2000 India started privatizing oil industry. Though it appeared local Indian private businessmen are setting up business now it is clear that foreign MNCs paid Indian companies to corner the oil blocks for exploitation so that they can make killing money by selling Indian oil to Indians at international speculative prices.
Mangala Oil field in Rajasthan has more oil than Saudi Oil fields. But it was taken over by British Petroleum using Vedanta as a front company. All KG basin gas production is taken over by the same British Petroleum using Reliance as front company. Though the transport costs within India are very less these companies were refusing to sell at reduced cost to Indians but insisting Indians has to pay at international prices as fixed in New York or London. Though it costs only $ 1.35 per BTU to supply natural gas from KG basin Reliance is insisting at paying $ 4.13 per BTU citing international pricing. The same process is used for oil shipped from Rajasthan to Indians. This is nothing but international robbery. To raise the prices Reliance is reducing Gas out put from KG basin. During the 1971 war it was BP that refused to supply oil to Indian Army and that is why we nationalized the oil industry in India. But after 30 years BP was able to get hold of Indian natural resource both gas and oil and want to sell at excess costs so that they can make good of lost profits of past 30 years.
With so much dependence on oil still the average speeds we achieve in transportation sector is only 35-45 kilometers per hour. Not a significant improvement. But the huge raise in oil costs increased food prices, equipment prices, subsidies for domestic oil industry, agricultural input costs, and made the life of the common man miserable taking every thing they made in to the pockets of oil companies. Reliance owners can build a house at the cost of Rs 4000 crores while many farmers are killing themselves as they cannot pay input costs for their agriculture like electricity or afford oil.
It is the greed of these international private companies is at the root cause of rise in oil natural gas prices. It is the same companies that killed every alternate energy production like Solar, Energy from municipal waste, agricultural waste. Indian produces close to 10 00 000 engineers of various fields and capable to produce enough alternate energy sources that cost less than petrol or diesel but still environmentally and ecologically friendly. We are the first country to create unlimited energy extraction from thorium a safe cheap free energy source from sands of Indian coastal areas, and a good substitute for nuclear energy. But that research is being killed for expensive and dangerous nuclear energy as all the technology was to be imported by the west.