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The Petroleum Politics

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by Shobhika Puri  |  June 3rd, 2012  |  Zee News, Zee Blogs

Nowadays, ‘petrol’ not only has the power to ignite automobile engines but to fuel strong emotions across the country. Petrol prices have risen by over 13 per cent in India over the past one year and this is not the final word. Petrol has made a long journey from being a blessing when the internal combustion engine was invented to becoming a curse in times where every month there is a new automobile launch. The main reason for this sad transition is that resources are finite while the needs are infinite. However, there is another reason for this mess – politics.

Petrol prices were decontrolled in June 2010 but the government has given the oil companies a free hand to determine the price of petrol at their retail outlets only now. What took the government so long to first allow decontrolling of prices in 2010 and another two years to actually implement the much delayed decision? Politics, myopic view, selfish motives, an eye on winning elections, uncooperative allies, perennially opposing opposition? The answer lies in a combination of all.

When the recent price hike of Rs 7.54 was announced (though the hike was moderated by Rs 2 after a few days), the opposition, some government allies and some from within the government like AK Antony and Jairam Ramesh opposed the move. The opposition is spreading the logic that the current international crude oil price is the same as what it was last year at this time, then why the price hike? Even the opposition knows the twin causes are inflation and the weakening of rupee vis-a-vis the dollar. However, saying this publicly would not suit their purpose of misleading people. But, what stops the government from giving this rationale? The reason is that the government itself is responsible for both the causes. It can keep blaming Europe for its problems but only so far.

Another oft-repeated logic that the government gives is that it has no say in the rise of petrol prices and that it is in the hands of oil companies post the decontrolling in 2010. However, the fact remains that the government can and has stopped the oil companies from raising their prices when it wanted to.

Petroleum is a scarce resource. So are diesel, LPG and kerosene. How come the latter three are left out from the price rise? Contrary to what the government may claim, the reason is not concern for the aam aadmi but vote bank. The people who consume these resources are very important for elections. However, like other welfare oriented schemes, this subsidy scheme too is faulty. For example, it is the rich who own expensive SUVs that are benefitting from the subsidised diesel prices.

No matter what politics is being played with petrol prices, the common man is bound to suffer. If the prices are increased, he suffers. If they are not increased, the government has to pay for the losses, which are compensated for by increasing taxes. Former British Prime Minister, Winston Churchill, had rightly said that in war, you can be killed only once but in politics, many times. The only difference here is that in India, it is the common man that is being killed many times and not the politicians themselves. So much for an innocuous natural resource like petroleum!

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