Rising Prices of Petroleum Products

Rising Prices of Petroleum Products, what can a common man do?

-Dr. Lalit Kumar Setia

India meets its energy requirements by importing crude oil and the rise in the global prices of crude oil directly affects the prices of petroleum products in India. The Oil Marketing Companies have been allowed to revise the rates of petroleum products keeping in view the global prices of crude oil. During the lockdown period of the year 2019, the crude oil price went down from $66 to $19 per barrel.

The portal of mypetrolprice.com clearly plot the prices of Petrol and Diesel during the last 6 months as under:

                      Source – Portal of mypetrolprice.com (retrieved on 20^th October 2021)

The price of petrol and diesel increased to Rs. 105.84 and Rs. 94 consequently. 

Impact of Rupee Dollar Exchange Rate on Prices of Petroleum Products

The Oil Marketing Companies procure the crude oil by making payments in Dollars while the sale of petroleum products is realized from Indian consumers in Rupee. In case, the value of the rupee falls the amount of sales consideration is also reduced due to the impact of the rupee-dollar exchange rate.

Global Demand of Crude Oil

During Covid-19 in the year 2019, the crude oil price went down from $66 to $19 per barrel due to lockdown and lack of demand globally. The Organization of Petroleum Export Countries (OPEC) and Russia agreed to cut the production of crude oil. The demand is rising but the supply of crude is not increasing, therefore, the price of crude is continuously increasing.

How Indian economy is affected by the high prices of petroleum products?

India is one of the largest crude oil-importing countries and the rising prices of crude oil adversely affect the whole economy particularly Agriculture, Transportation, Industrial Production, and Rate of Inflation.

The cost of transportation of goods increases and the prices of commodities also increase. The crude oil is purchased in Dollars and it also reduces the value of the rupee in terms of the dollar.

What can a common man do?

The highest power of a consumer is, to refuse to buy. But in the case of petrol and diesel, it is not possible to refuse to buy these products because the consumers are required to meet the requirements of their vehicles to travel for various essential needs. Instead of that, the common man can decide various things to reduce the adverse impact of rising prices of petroleum prices.

a. Using walk and adopting Electrical Vehicles and Bi-cycles

It has become a common habit of people to visit locally in the city using personal vehicles. With the rise in prices of petroleum products, the people feeling the heat of rising prices should adopt walking nearby places than approaching with the help of personal vehicles.

Reduction in visits to the market

Frequent visits to the market can be planned in a way that only one visit sorts out all purposes. Plan your trip so that you don’t necessarily have to make further trips each day. It will save you a lot of money compared to hopping from place to place unnecessarily. Just keep the idea in mind when making your plans, and keep your transportation to a minimum.

In case, it is not possible to cover the distances by walking on foot, prefer to use electric vehicles or bi-cycles instead of vehicles using petrol and diesel. When you replace 4-wheeler with 2-wheeler, the cost of transportation is reduced to a great extent.

b. Giving preference to modes of public transportation

Try to replace your trips by using public transportation such as trains and buses. The cost of operating and using a car to cover the distances include fuel, maintenance, parking, etc. In developed nations, sharing rides between neighbors is common, the carpooling can reduce the cost of travel. In case, public transportation is used for journeys instead of operating own car, the heat of rising prices of petrol and diesel can be reduced.

c. Purchase locally grown Vegetables and Fruits

The transportation cost of vegetables and fruits can be set off by purchasing locally grown vegetables and fruits than to purchase imported vegetables and fruits.

d. Preference for milk and dairy products

In villages, people depend mostly upon milk and dairy products for meeting the requirements of their diet. The locally available milk and dairy products don’t include the cost of transportation and in case, people prefer to use milk and dairy products, the heat of rising prices of petrol and diesel will automatically set off.

*Copyright © 2021 Dr. Lalit Kumar. All rights reserved.

This content was written by Dr. Lalit Kumar Setia; a renowned author and trainer. He completed his Doctorate in Commerce from Kurukshetra University Kurukshetra and MBA in Information Technology from GJU, Hisar. He also wrote two books, 15 research papers, and organized more than 200 Training Courses during his working period since 2006 in Haryana Institute of Public Administration, Gurugram. The article was published on 1st November 2021 and last updated on 1st November 2021. The writer can be contacted on lalitkumarsetia@gmail.com 

More Articles

https://drlalitsetia.blogspot.com/p/new-articles-study-material-notes.html 

पेट्रोलियम उत्पादों की बढ़ती कीमतें, एक आम आदमी क्या कर सकता है?

- डॉ ललित कुमार सेतिया

कच्चे तेल की वैश्विक कीमतों में वृद्धि भारत में पेट्रोलियम उत्पादों की कीमतों को सीधे प्रभावित करती है। तेल विपणन कंपनियों को कच्चे तेल की वैश्विक कीमतों को ध्यान में रखते हुए पेट्रोलियम उत्पादों की दरों में संशोधन करने की अनुमति दी गई है। वर्ष 2019 की लॉकडाउन अवधि के दौरान कच्चे तेल की कीमत 66 डॉलर से घटकर 19 डॉलर प्रति बैरल हो गई।

mypetrolprice.com का पोर्टल पिछले 6 महीनों के दौरान पेट्रोल और डीजल की कीमतों को स्पष्ट रूप से निम्नानुसार दर्शाता है:

          स्रोत - mypetrolprice.com का पोर्टल (सूचना 20 अक्टूबर 2021 को प्राप्त की गई थी)

पेट्रोल और डीजल की कीमत बढ़कर क्रमशः रु.105.84 और रु.94 हो गई है।ऐसे में आम आदमी क्या कर सकता है?

एक उपभोक्ता की सर्वोच्च शक्ति है, खरीदने से इंकार करना। लेकिन पेट्रोल और डीजल के मामले में इन उत्पादों को खरीदने से इंकार करना संभव नहीं है क्योंकि उपभोक्ताओं की अपनी आवश्यकताओं को पूरा करने के लिए वाहनों पर भारी निर्भरता है। वाहनों पर निर्भरता कम करने का समय आ गया है.

निम्नलिखित निर्णय आम आदमी और राष्ट्र की सहायता कर सकते हैं:

1. स्थानीय बाजार और स्थानीय स्थानों पर जाने के लिए पैदल चलने का अधिकतम उपयोग करने का प्रयास करें।

2. अगर आपके पास समय की कमी है तो ही साइकिल और इलेक्ट्रॉनिक वाहनों का प्रयोग करें।

3. अपने कार्यों की योजना इस तरह बनाएं कि अधिकांश कार्य केवल एक या दो यात्राओं में ही पूरे हो जाएं।

4. किसी भी मामले में, यदि वाहनों का उपयोग करना वास्तव में आवश्यक हो जाता है तो सार्वजनिक परिवहन को वरीयता दें।

5. दुपहिया वाहन से जो यात्राएं की जा सकती हैं उन्हें कभी भी चौपहिया वाहन से नहीं करना। यह आपको पेट्रोलियम उत्पादों की बढ़ती कीमतों के प्रभाव से बचाएगा।

6. सार्वजनिक परिवहन के साधनों को वरीयता देना - सार्वजनिक परिवहन जैसे ट्रेनों और बसों का उपयोग करके अपनी यात्राएँ करने का प्रयास करें।

7. कार का उपयोग करके यात्रा करने की लागत में ईंधन, रखरखाव, पार्किंग आदि का खर्च शामिल है। विकसित देशों में, पड़ोसियों के बीच कारों को साझा करना आम है, इसे कारपूलिंग के रूप में जाना जाता है, यह यात्रा की लागत को कम कर सकता है। हम कार साझा क्यों नहीं करते, अगर मंजिल एक ही है और हम दो अलग-अलग कारों के साथ जा रहे हैं।

8. स्थानीय रूप से उगाई गई सब्जियां और फल खरीदें - यदि लोग स्थानीय सब्जियां खरीदना शुरू कर देंगे, तो स्थानीय किसान अधिक खुश होंगे और सब्जियों की लागत भी कम होगी। लागत कम होगी तो सब्जियों के दाम अपने आप कम हो जाएंगे। आज सब्जियों और फलों की कीमतें अधिक हैं क्योंकि उनकी परिवहन लागत अधिक है। आइए हम जनता को स्थानीय रूप से उगाई जाने वाली सब्जियों और फलों को वरीयता देने के लिए जागरूक करें।

9. दूध और डेयरी उत्पादों को दें वरीयता - गांवों में, लोग अपने आहार की आवश्यकताओं को पूरा करने के लिए ज्यादातर दूध और डेयरी उत्पादों पर निर्भर हैं। स्थानीय रूप से उपलब्ध दूध और डेयरी उत्पादों में परिवहन की लागत शामिल नहीं होती है और अगर लोग दूध और डेयरी उत्पादों का उपयोग करना पसंद करते हैं, तो पेट्रोल और डीजल की बढ़ती कीमतों का असर अपने आप बंद हो जाएगा।

*Copyright © 2021 Dr. Lalit Kumar. All rights reserved.

This content was written by Dr. Lalit Kumar Setia; a renowned author and trainer. He completed his Doctorate in Commerce from Kurukshetra University Kurukshetra and MBA in Information Technology from GJU, Hisar. He also wrote two books, 15 research papers, and organized more than 200 Training Courses during his working period since 2006 in Haryana Institute of Public Administration, Gurugram. The article was published on 1st November 2021 and last updated on 1st November 2021. The writer can be contacted on lalitkumarsetia@gmail.com 

More Articles

https://drlalitsetia.blogspot.com/p/new-articles-study-material-notes.html 

Why Liquidity is must for an Economy?

Why Liquidity is must for an Economy?

In last article, "Solution to Environmental Crisis", we learned how India is tackling the environmental crisis and contributing in improving the green environment. 

No doubt, the collection of Goods and Services Tax (GST) is boosting the Indian Economy but due to impact of Covid-19 all around the world and also in India, there is huge downward trend in demand of Goods and Services. The economies of high scale production of Goods is no more for the industries and the cost of manpower also have increased. The organizations which have used Work From Home in their recruitment process and realized talented people to work from distance; have been benefited. There is need to increase the liquidity for increasing the demand, which will create employment opportunities in India. Let's understand it in detail.

Money and Banking:

The central bank of an economy ensures that the economy should have enough liquidity for smooth functioning of the financial transactions in the economy. The central bank also ensures that the banks should not have large number of stressed assets and for this purpose, the bank’s capital requirement norms are set up and monitored. The capital requirement norms are particularly to cover up the expected losses of the bank, in case, it failed to manage its business by providing credit to the suitable persons and organizations. The central banks assess the minimum capital requirement very carefully on the basis of cumulative default rates (CDRs) of the banks. In India, the RBI found that during 2017-18, the gross NPA (Non Performing Assets) ratio of public sector banks reached 14.6% and sensitized banking organizations to reduce the ratio. The liquidity crisis can harm the whole economy and it usually happen whenever there is increase in the NPA ratio or whenever the loan defaulter’s amount becomes very large. 

What refers to Liquidity for an Economy?

An investor always prefers to invest in those instruments which can be liquidated at the time of his need. The liquidity is the ability by which a person can convert any asset into cash quickly. In India, during second quarter of financial year 2018-19, the rupee showed significant fall in its value and the nation faced critical situation with rising prices of crude oil and prices of petroleum prices (in terms of dollars). The Reserve Bank of India intervened and sold dollars to improve the situation. Apart from it, the RBI also sold the bonds to increase the demand of rupee in overseas. These efforts had been taken to tackle two problems, first to appreciate the value of money in rupee and second to improve the liquidity in the economy which had reduced due to IL&FS crisis.

How Central Bank controls liquidity in an economy?

A crisis becomes worse when it brings chain impacts, in case of IL&FS the non finance banking companies (NBFCs) affected with lack of liquidity. One default in payment of loan, is not much stressful, it becomes stressful when there are defaults one after another, as happened in case of IL&FS. Even the IL&FS Financial Services defaulted for Rs. 440.46 crores up to the mid of September, 2018. Due to failure of IL&FS to perform in the housing sector, the banks stopped providing loans to all housing sector companies and even to the infrastructure companies. It led to less financing to infrastructure and housing sector, leading to higher rate of interests also particularly for this sector. In case, the sector is not recovered from this zone of lack of liquidity, the next sector it may impact is Auto sector including two-wheeler and trucks because most of the NBFCs finance the needs of Auto sector.

In order to control and maintain liquidity in an economy, the banks are forced to make provisions. In India, the RBI (central bank of India) asked banks to tackle crisis of NPAs by making enough provisions so that the economy not suffered significantly due to any crisis..... to be continued... (How India Tackled IL&FS Crisis...)

Liquidity and Covid Pandemic:

During pandemic of Corona Covid-19, it is observed by me that due to lack of liquidity, gold prices come downwards from Rs. 50,000 to Rs. 43,000 during the time, the Covid cases increased in India. And even it is observed that with downfall in Gold, the prices of Crude oil went up. This all happened due to liquidity in  Indian economy shifting from one sector to another for better returns on investments. 

*Copyright © 2018 Dr. Lalit Kumar. All rights reserved. 
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