[lurker]

Originally Posted by AshBabu

It is not true that USA can print dollar endless and buy anything it likes. There are checks and balances.

It is very true. And there are no checks and balances. Sorry for the cut and dry statement.

all checks and balances are in theory only.

[pratyush6]

Originally Posted by lurker

It is very true. And there are no checks and balances. Sorry for the cut and dry statement.

all checks and balances are in theory only.

Somewhat true, but this can't go on endlessly.

The problem with Oil Prices (for consumers) is that it is one of the biggest money making excercise for the State Govt. Earlier when there was a check on Oil Prices, the govt. provided Oil Bonds to companies in order to cover their losses (which eventually harms the common man).

Now with de-regulation of prices, the govt. is trying to make money off it. First there needs to be a debate if the GOI should actually try making money off this? Oil is such a commodity that links to everything. If Oil is down, the cosumption levels of everything else goes up - which in turn moves the market - All good for the economy.

And with the current Govt. in place I do not expect much help for the mango man in terms of prices atleast.

My limited thoughts on this enormous issue.

PS. Now that crude is down to $50 odd, I atleast expect the price to go down further Rs. 2 or 3 per lt.

[sachinayak]

Fuel Prices in India (post-deregulation) depend on three primary factors
1. Proximity of state elections
2. International Fuel Prices
3. INR-USD exchange rates

The first criteria is critical and overrides the inputs of the later two. With delhi elections coming shortly we will surely see a significant price cut, just in time before the elections.

So await announcement of Delhi election dates from EC rather than OPEC meeting outcomes to guess the next price cut date.

[sgiitk]

Now it seems the main sink for subsidies is Kerosene. Let them fix that and we may getter better Diesel at the pumps.

Apparently, LPG subsidy is likely to be minimal after the Direct Benefit Transfer Scheme.

[saurabhkum]

Brent Crude below 46$, Rs Vs $ at around 62 and most important Delhi Election on 7th Feb. All 3 news in our favour, will Govt now cut the rate of Petrol and Diesel ?

[ghodlur]

Originally Posted by saurabhkum

will Govt now cut the rate of Petrol and Diesel ?

Unless the Code of conduct kicks in I guess, the price drop by a huge amount is expected. Hope the govt does not play safe to keep the EC officials pleased and keep the prices unchanged.

The price of the Indian basket has fallen by more than $20 a barrel over the last month alone and with Delhi elections around the corner, there is a strong political reason to cut fuel prices

http://businesstoday.intoday.in/stor.../1/214333.html

[drmohitg]

I am pretty sure they will sit on there asses for sometime now and later blame it on Election code of conduct as the reason for not lowering prices. But post deregulation of prices, how does code of conduct govern fuel prices anymore?

[sachinayak]

With fuel prices deregulated (on paper/in theory), Election Commission code of conduct will not kick in. Surely, govt will announce a sizeable reduction in fuel prices end of this month - perfectly in time for the Delhi elections.

Govt is entitled to do this as the largest investor in fuel companies as a corporate decision (though the underlying political undercurrents are obvious to all but the voting junta).

[Samurai]

Originally Posted by lurker

firstly there are some facts about oil that need to be acknowledged by all before this debate can even begin:

But none of these are facts.

Originally Posted by lurker

So USA can price it's petrol at $1 or $.50cents. It really doesn't make any economic difference to it.

Wrong. Gas prices have gone crazy multiple times in USA. You just need to know some history.

Originally Posted by lurker

Now dollars can only be gained by trading with USA.

Wrong. US dollar can be gained by selling to any country that has US dollars, from their past trade with any other country that had US dollar, from their past trade with any other country that had US dollar, from their..... hope you get the idea. For example, China has so much excess dollars, they would happily pay in dollar to any country during trade.

Originally Posted by lurker

Because it can print endless dollars and can have unrestrained consumption on basis of trade with countries dependent upon oil imports

Wrong. Printing endless dollars will only increase the dollar supply, and will devalue the dollar dangerously. USA will invite hyperinflation by doing that. That will be suicidal to any country, including USA.

The only thing I can agree about your argument is that India doesn't really have true de-regulation. What we really have is a cartel.

[lurker]

That was some frenzy.

Originally Posted by Samurai

But none of these are facts.

Wrong. Gas prices have gone crazy multiple times in USA. You just need to know some history.

I know history really well sir. Even in USA oil marketing is cartelized, so they can all get together once in a while to make some bumper profits.

Wrong. US dollar can be gained by selling to any country that has US dollars,

And how does that country gain US dollar. Ok. Get the point ?

Wrong. Printing endless dollars will only increase the dollar supply, and will devalue the dollar dangerously. USA will invite hyperinflation by doing that. That will be suicidal to any country, including USA.

It won't devaluate dollar, because it hasn't yet done so. To devaluate dollar there needs to be surplus supply in market. That is exactly when fuel prices (that are to be paid only in dollars climb up) and mop up any excess dollar supply. So now do you get the point ? This has now become tantamount to global blackmail by USA

The only thing I can agree about your argument is that India doesn't really have true de-regulation. What we really have is a cartel.

Ok all Indians are bad. But all Americans are covered in roses, milk, honey. No hanky panky in USA.

[sgiitk]

Saw a news item that the basket is now at $45.

[Samurai]

Originally Posted by lurker

That was some frenzy.

Well, I didn't say there is no cartel in USA. There is no perfect market situation anywhere, it is as theoretical as a perfect black body in physics. I am only saying your presentation of "facts" is wrong. Since your understanding of how currencies work itself is flawed, I don't see how I can continue the argument with you.

[lurker]

Originally Posted by sgiitk

Saw a news item that the basket is now at $45.

oil price increase has been successfully deregulated.
price decrease is under administered pricing regime.

>>

Since your understanding of how currencies work itself is flawed,

sir, please impart your knowledge so that us commons can correct our flaws. My understanding is global free market is based upon full capital account convertibility. India doesn't go that route, because we have past experiences of Malaysia, Indonesia, and now Russia etc.

[Samurai]

Originally Posted by lurker

sir, please impart your knowledge so that us commons can correct our flaws.

Sure, I have done that long back.

Here you go: http://www.team-bhp.com/forum/shifti...ml#post2617240

[JoseVijay]

Oil prices below $45 a barrel

Source link: http://timesofindia.indiatimes.com/b...w/45877756.cms

NEW DELHI: Global oil prices breached the six-year low of $45 a barrel briefly on Tuesday but the last word is yet to be heard on how far crude would slide before bouncing back. While the low prices kept the good times rolling for emerging economies such as India, the slide is not without negatives.

Crude has fallen nearly 60% from $111 a barrel in June after Opec swing producer Saudi Arabia initiated a price war to retain market share against rising supplies from new players such as the US shale industry and Russia.

For India, the takeaway has been sharp reduction in pump prices of petrol and diesel. Petrol prices are now Rs 12.27 per litre lower than in August, while diesel prices are down Rs 8.46 a litre since October. Another round of cuts is expected on Janaury 15.

Low oil prices would reduce inflation and the oil import bill, which was $160 billion last year and is likely to be around $100-110 billion this year. It would also bring down subsidy on kerosene and cooking gas. All these would go a long way in keeping the deficit in check and lowering the need for raising taxes.

Oil prices are predicted to rebound in a year, even though they may not reach $100. That's when the government would be saddled with the job of managing the politically difficult task of raising pump prices.

Also, the low prices would make many new projects of oil producers such as ONGC and OIL unviable. To the extent that the supply glut is also seen as a result of a slowdown in the global economy, it also spells bad news for Indian exports and could pose a setback for the government's 'Make in India' plans.

Oil supply hasn't yet shrunk. Fields closed during internal strife came back into production earlier than expected in Libya and supplies from Iraq remained unaffected. Simultaneously, European and other major oil-consuming economies showed signs of cooling, creating a situation of over-supply in the market.

Saudi Arabia has consistently refused to heed appeals from Opec members Iran and Venezuela to arrest the decline in oil prices by cutting production. Saudi oil minister Ali al-Naimi was recently quoted by Middle East Economic Survey that Opec would not cut production whatever be the price.

While predicting oil prices is acknowledged as a mug's game, analysts are no longer sceptical of hitting the bottom at $30 or so a barrel. Such low prices may spread cheer among consumers, it could push countries dependent on oil revenues to the brink of economic collapse — with unthinkable consequences for the global economy.