Fuel prices are the main reason for the global inflation.It is because of soaring fuel prices per barrel the inflation has got to an all time high in the last four years.The fuel prices are increasing in the global market.In 2006 the fuel price per barrel was $35 but now in 2008,the price has risen to $135 per barrel.
As a result of this soaring fuel prices in the global market,most of the countries have risen their fuel prices.We pay Rs50 per liter whereas a person in USA pays 80 for the same quantity.So what is the reason behind this static price in India.Before we get into the reason behind the stagnant fuel price we would first see what are the impacts because of this price hike in fuel.
The major oil companies which were initially running in profit are incurring a loss of 400 Cr per day.That is the companies at a loss of rs 16 per liter.So this amounts to the net loss for the company.If the company continues to sell fuel at these rates so the companies have said that they would not have money to import fuel from september 2008.And the companies have said that they would ration the fuel supply,which might lead to long queues outside the petrol bunk.
The main reason behind the delay for raising the fuel price is simple politics.The ruling congress has lost the Karnataka elections recently and the left allies are seriously opposing the fuel rise.So the congress is well aware of the fact that if they rise the fuel prices that would give a negative results in the parliamentary elections round the corner.So the finance minister is very cautious about raising the fuel prices.
But in one way the delay in fuel hike is a boon to the common man because if the fuel price rises that would impact the inflation rate and which would definitely increase the prices of the commodities.But at the same time delay in the fuel hike is a bane to the oil companies.
There was a high level meeting today and was decided to rise the petrol price by 2-5.This price rise might be announced tomorrow[30-5-2008].
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