[Reader-list] Economics of Oil Prices

[A. Mani]

http://www.pragoti.in/node/4452

"Even as the entire country, particularly the poor people, are reeling
under heavy pressure of inflation, the UPA government has hiked the
prices of diesel, kerosene and LPG by Rs 3 per litre, Rs 2 per litre
and Rs 50 per cylinder respectively. The reasons given for this move
can be broadly categorised as follows:

    The prices have merely moved in tandem with the international prices.

    The government could not take the burden for it more than what it
already takes in the form of heavy subsidies for various petroleum
products.

    There is a case for deregulation of prices of these three products
on the lines of petrol as it is becoming unsustainable for the
exchequer and the public sector oil companies who are facing
'under-recoveries' for a long time. This step is a forward movement in
that direction.

    In a period of inflation, such increase in prices would bring the
demand down and, hence, would put a downward pressure on inflation.

This note attempts to call the bluff of the government by presenting
both the factual picture and the vacuous economic logic behind these
arguments. "



Best

A. Mani



-- 
A. Mani
ASL, CLC,  AMS, CMS
http://www.logicamani.co.cc