Historically, lion’s share of the oil price has been corporate-speculation that prompted even Lenin during the second decade of the 20th century to characterise the “oil question” as “shameless inflation of oil prices” and “criminal conspiracy of the oil magnates for the purpose of fleecing the consumer.” Viewed in this perspective, India under the Modi govt. is a typical case where its deliberate policy of shoring up speculative profits of Ambani-like private oil giants along with meeting state’s revenue mobilisation target makes India as the country having highest-ever domestic prices of petroleum products even as world crude oil price plunges to its quarter-century low.
In the context of COVID-19 pandemic coupled with contraction of Chinese economy, world’s biggest oil consumer, global oil demand has fallen by 2.5 million barrels a day leading to an abrupt fall in Brent crude prices by 35 percent to almost $ 30 a barrel due to the failure in striking a deal on production cuts between OPEC and Russia. This needs to be compared with the situation in mid-2014 when Modi came to power where world crude oil price was around $115 a barrel (in August 2014). According to estimates, for every dollar the price of crude oil drops, India gains approximately $1.5 billion (more than Rs.10000 crore on an average).
The natural outcome of this biggest fall in international crude oil price would be rapid reduction in domestic petroleum prices, lower transport charges, fall in production costs and a general reduction in prices and more real incomes as well as increased purchasing power for the people. But all these have been wishful thinking. Domestic petrol price in India still remains at $ Rs.70-mark as on March 10, 2020 more or less the same as that in August 2014 (when crude prices respectively at $34 and $115 a barrel).
Obviously, the dynamics of crony-capital controlled pricing of petroleum products under Modi regime can in no way be commensurate with global crude oil price collapse. Why crude oil price crashes on many occasions in the recent past have not been translated into domestic reduction in prices of petroleum products is obvious— it is due to the huge central and state excise duties. While the former’s share under Modi govt is ever-increasing, the latter is more or less constant. Integrally connected with this, corporate wealth accumulation by private oil giants like Reliance, Essar, Shell, Tata, etc. is also in horrific proportions. And taking advantage of the far-right policies of Modi, Aramco like companies are transforming India in to a “refinery hub” too. As a consequence, retail oil prices in India continue to remain the highest despite frequent crashes in global crude oil prices.
Thus, it is this ingenious use of oil as the most convenient tool of corporate loot by the fascist Modi regime and the crony capitalists integrated with it, that the domestic oil prices in India remain exorbitantly high even as world oil prices have come down by 35 percent. Two decades back, i.e., at the beginning of the 21st century, when world crude oil prices were almost the same as that of now, domestic prices of petrol, diesel, and LPG were available in India at around Rs.38, Rs.27 (per litre) and Rs.280 (per cylinder) respectively. And under Modi.1 and Modi.2 (during the last 5 years) the central government alone has looted around Rs.16 lakh crore from the people through huge taxes on petrol and diesel.
No wonder, and revealingly, in spite of being the staunchest adherent of corporate-sponsored GST, Modi regime is reluctant to bring petroleum products under GST—which would have made available petrol and diesel to common people at around Rs.40 even at the highest GST rates and assuming global crude prices remain at around $50 a barrel. Thus, other things remaining the same, it is this unparalleled “plunder of the interior” through artificial price-hike that obstructs the fall in domestic prices of petroleum products despite a historic collapse in world crude prices. n