• 5 minutes Mike Shellman's musings on "Cartoon of the Week"
  • 11 minutes Permian already crested the productivity bell curve - downward now to Tier 2 geological locations
  • 17 minutes WTI @ 67.50, charts show $62.50 next
  • 1 day The Discount Airline Model Is Coming for Europe’s Railways
  • 10 hours Desperate Call or... Erdogan Says Turkey Will Boycott U.S. Electronics
  • 32 mins Starvation, horror in Venezuela
  • 19 hours Pakistan: "Heart" Of Terrorism and Global Threat
  • 5 hours Renewable Energy Could "Effectively Be Free" by 2030
  • 6 hours Saudi Fund Wants to Take Tesla Private?
  • 24 hours Venezuela set to raise gasoline prices to international levels.
  • 18 hours Are Trump's steel tariffs working? Seems they are!
  • 2 days Batteries Could Be a Small Dotcom-Style Bubble
  • 2 days Newspaper Editorials Across U.S. Rebuke Trump For Attacks On Press
  • 2 days France Will Close All Coal Fired Power Stations By 2021
  • 2 days Don't Expect Too Much: Despite a Soaring Economy, America's Annual Pay Increase Isn't Budging
  • 2 days Scottish Battery ‘Breakthrough’ Could Charge Electric Cars In Seconds
What Happens Next To China’s Crude Imports?

What Happens Next To China’s Crude Imports?

Crude oil flows to Chinese…

The $80 Billion Megaproject Splurge In Oil

The $80 Billion Megaproject Splurge In Oil

The growing lineup of megaprojects…

India’s Fuel Price Problem Needs Urgent Solution

Fuel pump

Soaring gasoline and diesel prices in India require urgent action, Oil Minister Dharmendra Pradhan told media, and the government is trying to find a solution to the problem, which comes as a result of a substantial increase in benchmark oil prices and India’s excessive dependence on imported crude.

One way the government is considering to reduce the pressure on consumers is by introducing a windfall tax on local oil producers, to be activated in case international prices exceed US$70 a barrel. Since Indian oil producers sell their crude at international prices, any revenues from oil sales at more than US$70 would be collected by the state and transferred to fuel retailers to cushion the price blow to end consumers.

After Brent crude last week passed the US$80 threshold for the first time in four years, Pradhan called on Saudi Arabia and OPEC to do something about prices, calling this level unreasonable. Khalid al-Falih was quick to assure his Indian counterpart and the market at large that there is no fundamental reason why crude should be trading so high, even though earlier he had said Saudi Arabia would like to see oil at US$80 or even higher.

India imports more than 80 percent of the crude oil it consumes. Annual imports right now are about 1.575 billion barrels and for every dollar change in oil prices upwards, its import bill swells by US$13 million.

Related: How Does Oil Impact Bond Markets

Naturally, this also affects the economic growth of the world’s third-largest consumer of oil. With national elections scheduled for next year, Narendra Modi’s government is very motivated to find a long-term solution to the problem to reverse popular sentiment that it is not doing enough to shield people from higher fuel bills.

In this situation, some analysts believe it would be wise for the government to take more tax action, but in another direction: reducing value-added tax in Indian states and the national excise duty would be another way of tackling the problem, Indian media reported this week citing some of these analysts.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News