As the price of oil plummets further to less than 40 USD a barrel (from the record high of 147 USD a barrel), retailers and governments face mounting pressure to reduce prices of fuel sold to the common man. There are many arguments for the reduction in oil prices; to name a few:
-Since we are in a recession, low prices are needed to spur spending.
-The low prices of fuel will help curb costs for business, which is essential at a time in the economy such as the on going one.
I am not an analyst in any oil company or retailer that I advocate high prices for fuel. However, I opine that oil prices remain artificially high at 70-80 USD a barrel or perhaps even 60-70 USD a barrel. The oil producing nations in the middle east cannot spiral into deficit and nations in africa and Russia need this price level so that the governments in this region can maintain somewhat of a respectable cash inflow; the governments may then use this to spur spending in their own countries. The high price of oil per barrel will also force governments to spend on green technology, something which will become increasingly important within the next 5-10 years. It is important to note that while I advocate a floor for the price of a barrel of oil, I also advocate a ceiling for the same- even if the market demands it, the price of oil should not be allowed to increase beyond 80 USD a barrel for now. The reasons for this is the same as the ones mentioned in the previous paragraph
Assuming this is not possible, the price of fuel to the common man must then artifically held high by the government. Price of petrol/ gasoline should not be cut simply to avoid abuse by the common man. I do foresee reduction in oil prices to the common man resulting in an abuse of private modes of transport leading to another round of increase in prices of oil. This will be followed by yet another increase in lending rates to curb inflation and the result of a possible recession, not unlike the current one we're experiencing. People need to think before using oil for frivilous trips. Governments must be forced to improve on existing infrastructure and means of transportation in the countries (such as hybrid buses) to avoid another peak in prices along the 150 a barrel range. The artificially high prices must force business to come up with innovative ways to cut down on usage, and consequently reduce pollution. Furthermore, the high fuel prices will help oil companies maintain their profit levels (or atleast break-even in countries with government controlled production); the last thing we need is oil companies laying off employees as well...
What the market (in countries such as USA) and the common man (in countries such as India) are now demanding is a short sighted solution to ease the burden of fuel prices. The populace must understand that reducing fuel prices will only induce a temporary boost to the economy at the cost of the environment. Keeping these prices high will force masses to judiciously use one of the most precious resources this earth has to offer, will induce 'green' spending and will offer a permanent boost to the economy in the form of infrastruture and alternative-energy investments, providing the much needed unemployment relief. The long term solution involves sacrificing these few months of pleasure in favor of a better next few years and this requires foresight and more importantly, proper planning.
A short sighted solution often provides for regrets later, perhaps just as analagous to living in the moment...?
-Since we are in a recession, low prices are needed to spur spending.
-The low prices of fuel will help curb costs for business, which is essential at a time in the economy such as the on going one.
I am not an analyst in any oil company or retailer that I advocate high prices for fuel. However, I opine that oil prices remain artificially high at 70-80 USD a barrel or perhaps even 60-70 USD a barrel. The oil producing nations in the middle east cannot spiral into deficit and nations in africa and Russia need this price level so that the governments in this region can maintain somewhat of a respectable cash inflow; the governments may then use this to spur spending in their own countries. The high price of oil per barrel will also force governments to spend on green technology, something which will become increasingly important within the next 5-10 years. It is important to note that while I advocate a floor for the price of a barrel of oil, I also advocate a ceiling for the same- even if the market demands it, the price of oil should not be allowed to increase beyond 80 USD a barrel for now. The reasons for this is the same as the ones mentioned in the previous paragraph
Assuming this is not possible, the price of fuel to the common man must then artifically held high by the government. Price of petrol/ gasoline should not be cut simply to avoid abuse by the common man. I do foresee reduction in oil prices to the common man resulting in an abuse of private modes of transport leading to another round of increase in prices of oil. This will be followed by yet another increase in lending rates to curb inflation and the result of a possible recession, not unlike the current one we're experiencing. People need to think before using oil for frivilous trips. Governments must be forced to improve on existing infrastructure and means of transportation in the countries (such as hybrid buses) to avoid another peak in prices along the 150 a barrel range. The artificially high prices must force business to come up with innovative ways to cut down on usage, and consequently reduce pollution. Furthermore, the high fuel prices will help oil companies maintain their profit levels (or atleast break-even in countries with government controlled production); the last thing we need is oil companies laying off employees as well...
What the market (in countries such as USA) and the common man (in countries such as India) are now demanding is a short sighted solution to ease the burden of fuel prices. The populace must understand that reducing fuel prices will only induce a temporary boost to the economy at the cost of the environment. Keeping these prices high will force masses to judiciously use one of the most precious resources this earth has to offer, will induce 'green' spending and will offer a permanent boost to the economy in the form of infrastruture and alternative-energy investments, providing the much needed unemployment relief. The long term solution involves sacrificing these few months of pleasure in favor of a better next few years and this requires foresight and more importantly, proper planning.
A short sighted solution often provides for regrets later, perhaps just as analagous to living in the moment...?
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