Falling global Oil prices and USA link to it

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As an Indian the news about falling crude oil prices bring cheers on our face as it reduces our oil import bill, and since petrol and diesel prices are now linked to market directly it reduces the retail prices, It also helps the Ruling party which increases excise rates on petrol to fill their money chests. We all are very happy and so are almost all of the oil importing countries. Other thing which makes us even more happy is that the prices would reduce further till mid 2015 and if Indian government feels that their pockets have no space left for further excise duty hike we might see further decrease in retail prices of both petrol and diesel in coming weeks.

The big question which arises is :

Why are prices of oil falling and who is doing this and why?

Answer to this question is not very difficult and is infact a single word - USA, Now why US would do this? and answer to this is to get more control/share of global oil market. I would explain the 'How' part in following text.

This all starts from what is known as shale oil, which is a substitute for crude oil. United States of America has world's largest deposit of shale oil and gas, and US oil companies such as Shell have started producing shale oil from oil shale on commercial level if I iterate their words 'shale oil exploration can be sustained at cost as low as $18 per barrel. Don't be too happy now as it might never reach to this level(even in present scenario). USA is flooding market/using shale oil and has drastically reduced it's oil import bill, thus forcing prices to fall and make other OPEC countries to cut oil production.

World is currently witnessing over supply of oil, which is much more then what it needs. Since the demand and supply principle is basic for pricing of any commodity, hence fall in price is very logical. At this stage next question which comes to our mind is quite obvious:

Why would oil producing countries do nothing in controlling the supply?

Answer to this question is again a single word - USA, and I'll explain why USA would do this. US has started commercial exploration of oil shale and it needs market for it. Present global oil supply market share is very well divided between Middle east, Iran, Russia, Venezuela and Iraq apart from some other small suppliers. USA wants to increase it's share and then govern the whole oil pricing globally. Hence it has flooded the markets with shale oil. Since it has deep pockets it can sustain any price levels for much more time when compared to conventional oil producers of the world.

There is also political factors involved in this which is further forcing USA to refrain from cutting oil supply. Iran, Russia, Venezuela are not allies of USA and are rather against it diplomatically, economically, politically(you can add more terms here), Venezuela has 95 percent of government revenues coming from oil export, Russia has 70 percent of money coming from oil export. Falling oil prices have already playing it's intent with ruble down by 60 percent. Russia's attack on Ukraine is probably the reason. budget deficits of these three countries are rising and soon economies would see major cuts in government spending . This fall would also weaken Iraq and Syria (including the areas controlled by ISIS) as this terror organization would get too less money from oil which they sell.

Oil producing countries (OPEC) have decided to refrain from cutting output fearing that US would increase shale oil output further and get hold of their present market share. Hence in long term what I feel is that falling oil prices shall have a positive effect on world and oil importing countries as these countries(including India) would contain their budget deficit.

Probably by 2020 USA would become biggest oil produces of the world and would be called 'Saudi America' sounds funny but is very effective.

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Deregulating Petrol and Diesel price benefits Political class the most!

Welcome to Indiaassuperpower, your one stop blog for views on India and Indian politics.

Recently Government deregulated Diesel pricing in India, hence making both Petrol and Diesel prices dependent on the global oil market dynamics. Actually government boasted about this bold step and rightly so as it ended subsidy burden which government carried from so many years.

So I wanted to stick to the basics and gather information about who benefits the most from this move(apart from the Government)? Any guesses whom it would benefit even more?

Ok I'll start with a real life scenario where it is clear that this move benefits the political class the most, I can also reiterate the same as 'Political class would use this move for their monetary benefit rather then working for society' and following describes how it benefits them:

We all are aware that almost all of the private transport companies(road transport/rail transport etc) are owned and controlled by the political class and we also know major reason for the same, that transport business (bus transport) is a business where you get a lot of hard cash at end of the day, and in India nothing can match the power of hard cash(we have seen this during voting days when cash is distributed freely).

Diesel prices have shrinked by more then 10 percent in last 6 months, but what I have noticed is that the transport companies(or any other businesses which has diesel as their major input cost) have not decreased the ticket prices by a single paisa in last 6 months(I can confirm this for Punjab where I have recently traveled in buses owned by ruling politicians of state) and you donot have to be super intelligent to say that hence this scenario would be in all Indian states, and we all are well aware of the fact that whenever there is slight increase in the diesel price we can see immediate increase in ticket prices. Present transport fares are ones which were prevelant when diesel was atleast 10 percent expensive then today, but there has been no decline in the fares

. Now forget about private transport companies owned by Indian politicians, lets talk about railways. There has been regular rise in prices of train fares in past while we know that Diesel prices have actually declined. Hence the extra money collected clearly benefits the already super rich politicians, rather then the poor who travel in sleepers and second class bogies by spending their hard earned money.

Now the big question is that:
In an economy where government has deregulated the price of Diesel and Petrol, Why there has been no measures to make transportation costs linked to fuel costs? particularly when the prices of oil are decreasing. JUST for filling coffins of the political class?

I don't know if someone might have thought on same lines....but according to me it is actually a daylight robbery being committed on roads and railways by the political class.

It has also provided a free hand to government to increase excise duty on petrol and diesel in name of controlling fiscal deficit.

Concluding this post I strongly believe that the sector which has diesel as major input material for them should also be directly linked with the prices. ie ticket fares of railways/buses/autos/three-wheelers should increase/decrease as the prices of crude oil increases/decreases every fortnight, as otherwise this robbery by political class would continue and they would keep on filling their coffins and poor mango-man would keep on purchasing overpriced bus and train tickets.

What are your views about the same, Do comment for a healthy discussion. THANKS for reading and if you like it that share it!

Indian Political class - pre Independence and now

Winston Churchill once said "when ever we leave India, It would be ruled by the goons" and looking at present condition of the country and deeds of the political class. The statement is proved true even after 67 years after gaining independence. When an officer halts illegal activity then the ruling class dismisses the officer and dictates to ruling party that if they say anything against the decision then the support of their MP's in Parliament would be taken back. Every person in power rules their people rather then administering efficiently for their upliftment. PreIndependence era was 100 times better wrto law and order, implementation of laws and another merit about British era was that we were much better placed in transport sector in pre independence era, train journey from Ambala cantt to Amritsar took 4 hrs then and it still takes 4 hrs in superfast class of trains....isn't it shameful.

In India a major portion of the votes which are given is often purchased by the candidates(who have deep pockets filled with money which they gulped in their last term). Majority of the people put votes by keeping their castes in mind and making as goon win elections(from their own cast), rather then choosing a candidate with clean image. Some percentage of Indian voters are really really foolish(according to me) as we can clearly see around 30 percent of criminals representing people, These criminals would never ever be convicted because as they say "supremacy of parliament should be maintained" and they are above the law. This bloody notion that Parliament is above all other institutions(even the constitution) is helping in shielding the criminals/corrupt people who have reached there by hook/crook and muscle power.

The whole bloody system is corrupt, people are sleeping, Political class is doing nothing for country as various initiatives which were good for country like "Hum do hamare do" for controlling population is no more advertised and is informally taken back by the government with the sole reason being that if population is controlled and people start studying till the level when they can understand things good for country then they would root out the present political class, So why hit your own feet with axe. When Politicians follow approach of "Divide and Rule" over people rather then unite them together for the country, Looks like the political class have put country up for sale, everything can be purchased here votes, goons, riots, disharmony, and we are thaught that britishers played "Divide and Rule". I still think that if Britain didn't go bankrupt after second world war then they would have administered us for a longer duration and we would have been technologically ahead by atleast ten years as of now.

I still firmly believe this country needs a revolution against corrupt political class, so that we can maintain the rich history we possesed, rather then saying britishers took it all away, whereas actually it's the political class which is taking it all away from the country and selling the country to foreign hands. I somwtimes wonder about why in USA the party which wins the election and forms government is termed as 'Administration' whereas in India we are 'ruled' by the politicians which we elect. God save this country because if some offcial wants to do right he/she is transferred/suspended (for example Ashok Khemka and Durga nagpal), there would be many others which the media class is not paid for to highlight.

GOD SAVE THIS COUNTRY from going to the gallows!! JAI HIND!!