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Oil sector reform: missed opportunity Anachronism of Asian premium Dawn of a New Energy Era? Where is Moily’s prophecy of energy independence? The time for it is now Paying for sins of the past... Huge under-recoveries continue Rural prosperity will propel development A sun-rise industry turning sun-set A praiseworthy pricing policy Clean energy sector catches up with thermal power Clean energy sector catches up with thermal power Ambitious goals, uneasy path Piped gas a pipe dream One of a kind project... How prepared are we for the energy transition? Why ONGC should pay nothing to buy a stake into GSPC’s KG block path Awaiting a new(nu) year(clear)! Current impasse short-lived… A small first step towards the state’s solar mission A sound energy strategy... Welcome improvements in coal production Riddle wrapped in a mystery A golden age of gas? Allow market forces to shape destiny Maha merger – a beginning Game changer in unexpected way Gujarat has 2200km gas grid, TN shuns this! CEA versus CEA Ending the mother of all corruption The rebirth of the Indo-US nuclear collaboration Why has it not fallen enough?
 
Why has it not fallen enough?
OPEC, and in particular Saudi Arabia, presented an unintended windfall to Narendra Modi’s government by adopting a new production policy somewhere towards the end of 2014.

OPEC, and in particular Saudi Arabia, presented an unintended windfall to Narendra Modi’s government by adopting a new production policy somewhere towards the end of 2014.

This has resulted in a free fall of oil prices: from $110/bbl to less than $45/bbl, and currently above $60/bbl. Instead of supporting a minimum oil price, as they have attempted to do since the last dramatic drops first in 1986 and then in 2009 by controlling production, OPEC went after maximising their market share.  

It is to the everlasting credit of the NDA that it decided not to allow the sharp drop in oil prices to flow through completely to the consumers by increasing central excise taxes four times starting in November 2014. Surprisingly the Opposition did not protest the way they always do against such a non-populist policy.  

The following Chart -1 shows when the crude oil price (based on Indian basket of crude oil price) has fallen by 39 per cent between May 2014 (when NDA came to power) and June 2015, petrol price has fallen by only 7 per cent.

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