Having shot up to 79 dollars a barrel, crude prices in the international market have corrected rather sharply to below 57 dollars a barrel last week. But the UPA government, which had raised so much of hue and cry along with hiking the pump prices of petroleum and diesel products, has conveniently forgotten to revise the tariff downward. As and when prices move up, the government machinery?from the Prime Minister downward?starts giving sermons as to how the oil prices must not follow an administered pattern and be linked with the market so that the state-owned oil companies do not ?bleed??.
The government machinery is generally supported by economists with ?reformist?? bent of mind. These set of economists pitch the campaign for linking the oil prices to market so high it looks as if the national economy would plunge into crisis if the common man is not made to shell out more for the fuel, which he uses in the kitchen or personal vehicles or public transport. But then this campaign is only limited to times when the Brent Crude trade high in London. No one bothers to utter a word about it when prices move backward. Petroleum and Natural Gas Minister Murli Deora says he could look at revising the prices only if the quotes in the international market revert back to 50 dollars a barrel. Even the multi-lateral agencies like IMF which keep advising the governments to pass through the burden of high prices, have kept quiet about the state agencies pocketing the gains of lower prices. Much before the price revision at the retail level was announced despite ?friendly criticism?? of the Left parties, the Brent Crude was trading between the range of 62 and 69 dollars a barrel. Then it touched a high of 76 dollars a barrel mark forcing a strong reaction from the largest consuming countries including, the US, China and India.
Speculators in the global market jumped into the game making a killing for themselves. Members of the Organisation of Oil Producing Countries (OPEC) also made fortunes while consumers paid through their nose with the maximum of impact coming on the middle and lower middle class people in importing markets like India. Since the speculators could not hold it for long, the correction was but natural. This was expected by many of the policy-watchers but then the government did not want to take the burden, which it wanted the people to carry. Now that burden is gone, despite warnings of production cuts by the OPEC members and weather conditions changing in the US, the UPA government would like the common man to carry on the weight of high prices on his head, no matter the fuel prices have spoiled the household budget. The Left parties, expectedly, have kept mum on the issue because in the absence of high prices, their media briefings would not make headlines. In the meantime, the common man continues to suffer because while the headline inflation based on the WPI looks much under control at the sub five per cent level, the numbers behind the figure released every Friday are worrisome. According to a trade and industry chamber study, prices of eight commodities of household usage like wheat, gram, milk, eggs, meat, etc, have seen a price rise of eight to 35 per cent in the last few months. Prices of these essential commodities have firmed in the international market as well. Thus, easy imports would not help ease the situation. For instance, prices of coffee have shot up from a quarterly average of 115 cents per kg in July-September 2005 to 170 cents per kg in September, 2006; tea from 166.8 cents per kg to 190, wheat from 151 dollars per tonne in July-September 2005 to 196 dollars per tonne.
A lot of speculation has built around the markets for essential commodities in the global market. The domestic market is no better and the future commodity exchanges are making the situation worse. The government on its part has not been fair to the people, who at least as consumers would not like to be cheated. If prices were hiked when crude was trading high, they should be lowered when the correction has taken place. Not much has been done about building strategic oil reserves. A large consuming country of the size of India cannot depend on the market vagaries for all times to come. With the geo-political situation in West Asia always remaining on a boil, uncertainty around the energy prices would always remain an area of concern. It is time, we built large amount of strategic reserves not only to maintain price stability but also to face situations arising out of strife in the oil-producing region.