As we all know, Crude oil prices have reached historical record low levels with prices touching $30 a barrel for the first time in 12 years! Oil prices have been in free fall since June 2014 when it was $105 a barrel, up front a ever-historic high of $143 in June 2008. Apparently this oil fall is caused by a combination of factors like US becoming the world, economic downturns in leading markets like China, actual reduction in demand in many markets due to better efficient vehicles and internal strife, war and other disturbances in oil-producing countries. Oil pricing involves complicated international economics and geopolitics beyond my understanding, though I believe it is decided by an ancient group of gravelly silver-haired men and women who meet around an expansive mahogany table in some ancient European location to dictate what direction the world should take.
India for a long time had been following a government-controlled, subsidized retail pricing method for petroleum products, where the Indian Oil Corporation set retail prices for Petrol, Diesel and LPG (far below market prices) in consultation with the government. It was only recently that prices were deregulated to move in accordance to international crude prices. So, now that crude prices have come down drastically, petrol prices should also reduce equally right? By current crude prices, petrol should be now retailing at around a mouth watering Rs.30-40 per liter. However, it is still stuck at around Rs.60-70 depending on where you are in India, same what petrol costed when crude was trading at Rs.100 in 2013. Why? The answer is, taxes. Petrol prices have been reducing in bursts in accordance to lowering crude prices alright, bit the government has been jacking up taxes at an equal rate that any reduction in prices for the end user end up getting canceled out.
Why People Want Cheaper Fuel
At first sight, this will seem to be preposterous! Lower crude prices should mean lower petrol prices. But that is not what is happening here! The so-called "common man" is being denied the advantage of lower petrol prices! But lower petrol prices for what? The clamor for cheaper fuel prices is getting more and more deafening from all sides because people crave cheap fuel for one and only one thing: to drive their cars. To drive and drive and drive some more, because that is what sets them aside and elevates their supposed value in society. India is a country where the single, ultimate life goal of almost every single individual is to own and drive a car. Every single person. No, there is no other goal. And for this, he needs cheap petrol, and hence the outrage against not lowering fuel prices. And all those agencies clamoring for reducing fuel prices are only an extended sociological symptom of this. In today's India, anyone advocating against a reduction in petrol prices would in common outlook warrant a through psychological investigation. However, it makes a lot of sense petrol prices are not raised despite falling crude.
Why Fuel Prices Should NOT Get Cheaper
This ridiculous addiction of ours to these totally unnecessary metal contraptions just to fulfill some superficial craving akin to tobacco addiction, is changing the geological composition of our planet and is killing us. The single biggest talking point of the world right now is climate change, which is in no small way linked to burning of fossil fuels. However, none of all that matters to the "upwardly mobile" Indian whose sole prerogative is to burn fuel and show off their greatness in stupid 1 liter hatches, whose only dream in life is to own a big-ass SUVs or a road-yacht sedan (or both). It does not matter even if their children die of respiratory ailments, to whom all this talk of "pollution" and climate change are some conspiracy to hinder India's "development". Commuting to office in cars everyday in cities is one of the biggest sins you can commit. Driving on highways is another thing altogether.
Cheaper fuel encourages more driving, which will exacerbate ALL problems Indian cities are currently facing, which is why petrol should NOT get any cheaper. The last thing India needs is more people driving around on cheap fuel, increasing congestion, pollution, accidents and adding to inefficiency.
Reducing petrol prices will mean more cars, more traffic jams, more congestion, more pollution, more travel times, more stress, accidents and chaos (we don't know how to drive) and health problems, more inefficiency. But people just do not get it. And if you are in the car-driving population, you are in the top 10% of the Indian society, which hardly makes you "aam aadmi". And 10%, mostly driving alone one person per car, take up almost all road space in cities. This is like a person walking along the road saying: "I won't allow anyone else to walk within three square meters of me!" Yes, it is your right to drive a car, but the road is public property, and you have no right to jam it up thereby denying space for others to use it. And also, you have no right to choke 90% of the population to death with your fumes. No, cutting down on driving is not for the "greater good", it is for your own good, because it involves space common to everyone and affects everyone. Why should people not driving pay for the totally unnecessary indulgence of a few?
Tell me how the petrol price hike has affected your every day livelihood. That you cannot drive your car to work to show others?
— vadakkus (@vadakkus) May 23, 2012
"But I need my car to get around and go to places!" Oh yeah? So how do the 90% of Indians who do not own a car get around? Indians should realize that there is no clause in the constitution of India that guarantees rights to cheap fuel. The only people affected by an increase in petrol prices will be the above "white-board" car-driving population. An increase in diesel prices however will fuel inflation as it is diesel is the fuel used in transportation. However, if diesel prices are reduced the only people benefiting will be rich SUV owners, and people will simply buy more diesel cars, as we have already seen, though there is no substantial benefit on buying a diesel car unless you are a taxi operator. For the record, India is not the only country that is not reducing fuel prices to match global crude. The government should under no circumstances reduce fuel prices but instead take advantage of falling Crude to actually pay for improving public transit. This will, in the long run, improve the conditions of our pathetic public transport systems which as of now offer no alternative to driving to even those who want to switch.
Making Car Users Subsidize Public Transport
Instead of randomly increasing general taxes on petrol prices every time retail prices fall, the finance ministry should do something more sensible and sustainable: Introduce a "transit cess" on retail petrol and diesel (from which STUs and Indian Railways should be exempt). This should be at a minimum of 2% of the price of one liter of fuel, increasing proportionately to the decrease international crude prices up to a maximum capping level of 10%. And within this cess, 50% should go to the Indian Railways and for the remaining 50%, a corpus fund should be created at each state level, to which the cess amount coming from each state be contributed to develop that state's public transportation systems; to funding STUs or any Metro systems or even to developing walkable solutions in cities. This one simple step will at one shot both provide a steady stream of income for developing our deplorable public transport systems, all of which are desperate for funds, while also considerably lowering the burden on the government. In short, car drivers will be subsidizing (paying for) better public transport!
This will help a lot in solving traffic related problems than unworkable schemes like #OddEven.
Of course, high petrol prices might not discourage our car-worshiping population to give 'em up, but this move will help to build up our transit systems. The more they drive, the better our systems become, and one day they might be good enough for those entitled car drivers to muster up enough courage to board a bus or train.