‘Fueling’ Growth or Inflation?

Worry not if you put your hand in your pocket and find no money at all. Your fingers go deeper down in the corners to search for a note or a coin that might have hidden itself, refusing to come out, but land up peeping out of the small hole in the pocket, big enough to pull out all your hard-earned money. The unique thing is that the hole has been burnt without the use of ‘fuel’ as fuel in any form has become a virtual commodity that a common man is struggling to afford.

The recent years have seen an unaccounted and consistent increase in fuel prices that oil manufacturing companies and the government is trying to justify by giving hollow excuses. Whether it is improving the profit margins or covering the manufacturing costs, the price rise has to be ultimately borne by the common man who is a mere consumer compelled to use fuel in various forms, thanks to the modern and facilitated lifestyle. While the increase is unstoppable, the reasons for the same are many.

The one most commonly given out, probably because it is the simplest to make the foolish consumer believe, is the continuous losses being incurred by oil companies. The more intellectual or rather rational cause of oil price rise is its dependence on the value of US Dollar as most transactions are carried out in this currency worldwide.

Inflation and price hike not only created a menace in the economic sector of the world affairs but affected largely the already affected commodity that is oil. Its prices went sky high that also made the prices of other things reach peak. Oil is one such commodity that is much needed in the day to day usage especially in the transportation that affects a common man’s life a lot. The automobile cost allowance automatically rose and as per the increase in the transportation cost the food and commodity prices also rose. There is a very strong impact on common man’s life if there is a price rise.

A recent case in India was a petition is filed by MP PC Thomas against the “unfair fixation of the oil prices by the oil companies” on which the Kerala High Court directed the Reliance Petroleum and Indian Oil to file responses with documents and balance sheets because irrespective of the inflation the price hike of oil has given rise to the situation where the common man has to live at the mercy of petroleum companies.

For this the companies justified by saying that they bear heavy losses but this time the court had asked them to produce the sheets and show their losses.

While oil marketing companies continue to bleed, oil producers are flourishing. The recent is Oil and Natural Gas Corporation (ONGC) whose profits have jumped by 60% to reach Rs 8,642 crore. While oil marketing companies like HPCL and BPCL posted quarterly losses of Rs 3,000 crore-plus each, ONGC is rapidly profiting due to low subsidy and higher selling prices. It would be interesting to see till when will the excuse of loss incurring companies given to justify oil price hike would remain valid, considering not everyone in the market is lacking behind!

Snigdha Verma