The words of another man’s wife may seem sweet as honey; they may be as smooth as crude oil.
But in the end she will bring you sorrow, causing you pain like a two-edged sword.
India is the third largest oil market in the world and is highly dependent on crude oil. India's development and plans for the future depend on oil. Consumption is about 211.6 million tons of oil every year. Of these, less than 35 million tons are produced in India. The country lacks oil reserves, and new oil fields are poorly explored.
--- Where does India get the rest of its oil from? ---
Iraq, Russia, Saudi Arabia, the United Arab Emirates, the United States and Canada are the countries where India gets its oil from.
India imports almost 85 percent of its oil, which is the main reason for high fuel prices.
India is dependent on imports, with OPEC+, the organization of the oil exporting countries, partly to blame.
OPEC cut supplies - demand is growing - Prices rose.
People in India pay more than 100 rupees per liter of petrol and every Indian household is affected by this rise in fuel prices.
*** 1 Indian rupee (INR) in US dollars (USD) = 0.013 ***
It is important to understand that Indians pay around Rs 100 due to taxes. Almost 2/3 of what the buyer pays is excise and taxes. The base price of fuel, transportation costs and dealer commissions are only part of the pie.
For example, the price of gasoline in Delhi on 18 August was Rs 96.72 per litre. Of Rs 96.72, the base price of gasoline is only Rs 34.
Then comes the freight at 0.28 rupees, followed by the price charged from dealers at 32.10 rupees. The excise tax is Rs 32.90, which is collected by the government.
The dealer fee is Rs 3.68 and may vary depending on your location. Next comes the VAT or Value Added Tax of Rs 20.61, which is collected by the state government. India has the highest fuel tax at 260% of the base price for gasoline and 256% for diesel, according to CARE ratings.
In Germany and Italy, the fuel tax is 65% of the retail price. In the UK - 62%. In Japan it is 45 percent and in the US it is 20 percent. In India it is 260 percent!
--- What to do? ---
State and central governments can make oil cheaper if they want to. Among other things, they could intervene by fixing oil prices. Currently, oil retailers in India can set the price of gasoline and diesel after taking into account their own costs, which are mainly dependent on the price of oil in the international market. They also take into account their profit.
Previously, gasoline and diesel prices were regulated by the state, which paid subsidies to oil sales companies, protecting consumers from shocks in the international oil market.
In extreme cases, the government can still intervene. India can start by diversifying its imports. India is now heavily dependent on oil supplies from Western Asia, with the region accounting for about 61% of the oil supplied to the country. Previously, India had a wider supply base. Now everything depends on OPEC+.
With the coming to power of Joe Biden, India may resume buying oil from Iran and Venezuela. Reports say that India is already in talks with both of these countries. Once Iran was one of the main suppliers of India. But as of 2019, imports from Iran are zero due to the Trump administration's sanctions on Iran.
In 2018-2019, India imported 23.5 million tons of Iranian oil, almost a 10th of India's needs. Oil from Iran and Venezuela is cheaper, but both countries have come under US sanctions.
To counter rising oil prices, India's strategy should be to explore new markets and find ways to circumvent US sanctions.
As an option - to use offers of oil supplies from Russia, which is currently happening. In particular, after problems with oil exports from Russia in connection with US sanctions.
India also needs to rethink high taxes and adjust them in extreme circumstances. India also needs to explore new reserves at home and gradually move towards an oil-free future.
bbabo.Net