The Sports-India Community

http://ia.rediff.com/money/2008/jun/02mrv.htm

By now it is becoming too obvious that the United States is playing the oil game all over again. And this is the desperate gamble of a country whose economy is neck deep in trouble.

Given this scenario, managing prices of oil is central to the US economic architecture. Expectedly, this gamble has been played in a great alliance between the US government, US financial sector and the media.

Interesting article.   As usual, welcome the thoughts of fellow forumites...

United Airlines wrote to me (and all other customers):

Speculators buy up large amounts of oil and then sell it to each other again and again. A barrel of oil may trade 20-plus times before it is delivered and used; the price goes up with each trade and consumers pick up the final tab.

I do not understand the issues wrt speculation at all to comment.  But some people seem to be saying that is the major problem while others saying that has a very small effect.

The commodities market is not as regulated as the regular stock exchange market in the US. The traders are leveraging a small pool of money (say 5% ) to control / speculate on 100% of the actual oil trades done. What is said in that email is true to a large extent!

Thanks for that article. It was really great to read.

But i want add some information. Now, Oil is under $40 / barrel or between $40-$50 / barrel.
Maybe its impact from global crisis, many country have impact especially for US.

My post is not exactly about the price of oil and its global impact, but perhaps of its Indian impact.

One thing I applaud the Modi government of doing is doing away with the petroleum subsidies. This is great, imho. Wrt kerosene, I think it was/is one of the worst subsidies. Kerosene: the worst subsidy of all.

Ditto about the subsidy to petroleum.

While generally I support the ending of the LPG subsidy, I wonder if that will come back to bite us. LPG subsidy can raise India's healthcare costs. Is it possible to make target LPG subsidies to people who need that to not go back to biomass? Any studies on whether the impacts to the environment are really going to be bad? Essentially, for things like this, education, healthcare, etc., where I think there is some benefit to the public in subsidizing things a bit, the question is what is the optimal subsidy and how to deliver it effectively.

Anyway, kudos to the Modi government in this regard.

Any thoughts/references wrt the LPG subsidy?