Hike in Petrol and Diesel Prices

The Union Government states that with Rs.4 and Rs. 2 hike in prices of petrol and diesel respectively, it would compensate the losses being sustained by public sector oil companies. According to Petroleum Minister Murali Deora, the way crude oil prices are again increasing in the international market; it was not possible to keep the prices down. At present, crude oil prices in the international market are around $70 per barrel. When it was $32 per barrel in January, the Government had reduced prices of petrol and diesel by Rs. 5 per and Rs. 2 per liter, respectively. This way, within just six months, this cut has been withdrawn.

Not in Parity with International Prices
According to the Government figures, prices of petrol and diesel are still not in parity with international prices, and the Government is bearing the burden of losses. It is being said that not increasing prices of cooking gas and kerosene means a loss of Rs.1.7 billion everyday. From the viewpoint of normal figures, these things appear to be right, but it is not so easy to understand the economy of oil prices. Their prices in the Indian market are not decided only on the basis of the international market prices. Oil companies show losses on account of refining and transporting them, and also there are other expenses included in them, like those of oil companies and the petroleum ministry. Besides, there are other aspects in their budget like marketing and publicity that make one wonder.

Why do oil companies need publicity? The demand to stop it is being made since long, but there is no one to listen. There is no change in their style of functioning. Even when oil prices were sky high, officials of oil companies did not bring about any change in their attitude. After all, when the officials of the oil companies would get such high salaries and allowances, get such facilities for traveling and other perks, which are not needed, it would definitely increase the total expenditure.

Reason for Losses of Public Sector Oil Companies
The argument is that the Government does not have any other alternative except this. When the Union Government officials would keep getting gifts in the form of pay commissions after regular intervals, how could oil companies deprive their workers of it? Our policymakers would have to provide an answer for this. In our opinion, the main reason for losses of public sector oil companies is their wasteful expenditure, and expenditure being incurred under unnecessary heads, but see the irony that subsidy is being said to be the main reason for it. In a country like India, where majority population is poor and from lower income group, such thoughts could be called harmful.