Thursday, June 26, 2008

'Consumers must pay the economic price of fuels they consume than the artificially controlled one.'

Has easing of price control made oil boil?

The task of pricing fuel in India would be equivalent to accomplishing the great Indian rope trick without a blemish. On one side are consumers (also the voters) and, on the other, are companies such as refiners, fuel marketers, etc. Can price control help?
At an OPEC meet organised in Saudi Arabia recently, the Finance Minister, Mr P. Chidambaram, suggested crude oil price be regulated by means of fixing a price band. While suggestions such as these may be borne out of sheer desperation for a country fighting with inflation at a 13-year high, experts see solid reason behind such a step, if implemented.
For one, volatility would be taken away and so would be the daily oil shock of the commodity surpassing one record after the other. "Oil producers or OPEC do not ostensibly exercise any price control. Slackening of control has actually commoditised crude even further," says Mr Deepak Mahurkar, Associate Director, PricewaterhouseCoopers, Gurgaon.

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