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