Why Oil Prices Are Soaring?

We have been witnessing sharp rise in prices of edible oils and fuels. This additional burden on the pockets of a common person is creating anger amongst people.
What are the reasons for this rise and actions initiated by central government?
Let’s understand the requirement of 6 edible oils (Mustard oil, Ground nut oil, Soya oil, Vanaspati, palm oil, Sunflower oil) for whole India in a year. The demand for vegetable oils for a year is around 25 million tonnes and increasing every year whereas domestic production is just around 11 million tonnes so the deficit of almost 14 million tonnes. This additional requirement is fulfilled by international market. We are dependent mainly on Brazil, USA, Argentina, Malaysia, Indonesia, and Ukraine for 56% additional requirement. The rise in price is a reflection of international prices. The scenario in few countries has changed, vegetable oils has been shifted from food market to fuel market. The recent trend shows especially Brazil, USA is converting vegetable oil to biofuel. Other factors are too much import by China, labor issues in Malaysia and strained relations, export duties on palm oil in Indonesia and Malaysia, lower than expected plantation in USA due to changing environment, reduced yield in Argentina due to prolonged dryness.
We need to think seriously as an agrarian nation, why we could not fulfill our own requirement when our major population is still agriculture based, why farmers are reluctant. Why no actions from state and central government in last so many years. Why PM Modi has to look into a particular commodity issue and decide action plan? Central Government has initiated some actions to encourage famers by raising MSP, providing quality seeds and technology oriented farming. We will see the benefits in near future. Farmers’ bills were major game changer to improve the socio-economic status of farmers however opposition leaders biased propaganda finally led to hold on bills by Supreme Court. Who is at loss? Obviously farmers.
We had experienced that when Modi government formed in year 2014, the pulses prices were more than 200 rupees/kg, then with right actions, pulses prices came down. We want to see the similar thrust to curb edible oil prices as the household income is already reduced due to COVID – 19.

Regarding fuel prices especially Petrol and Diesel, people are questioning Modi Government , let us understand in detail. We import more than 80% crude oil so the changing international prices affect the prices in India. The international prices rose to around 300% in last one year from 18 dollars to 72 dollars. If we consider the price of petrol is Rs 100 then in that base price is around 32 rupees, central government tax is 23 rupees and STATE GOVERNMENT tax is around 42 rupees, MAHARASHTRA and RAJASTHAN charging the most. Therefore, people need to understand where the maximum money is going and who can initiate actions to reduce the prices.
So, what Modi government is doing to reduce the dependency?
• Ethanol blending before 2014 was just 1% now it has been increased to almost 8% and actions are initiated to make it 20% by 2025.
• More thrust on solar, biogas and wind energy, raised more than double the capacity from 2014 and next target is 220 GW.
• Thrust on Electrically driven vehicles
• Building more refining and storage capacity
Modi government is utilizing the revenue generated for various development projects.
You can read about change in defence sector through my article:
https://sharencare.in/2021/03/28/how-defense-forces-have-changed/
Huge money is being spent on various sectors to uplift economy and to improve socio-economic status of every citizen. State governments like Maharashtra, Rajasthan should also highlight their spending on the revenue generated; it will build confidence in masses.