Why the price of petrol is increasing, and what is OPEC and its role in it?
Once the petrol price is used to be 75/lit, but now it is almost 110/lit. 21st century when technology and lifestyle are in their culmination, then this price of petrol haunts middle-class people, but what is the reason and who is behind it? Is there any chance of decreasing the price? Let’s discuss all the points one by one.
First, we talk about OPEC and OPEC+. Recently the meeting had been held of OPEC and OPEC+, and in this meeting, it has been decided that there is no chance of lessening the price of petrol.
First, we understand what OPEC and OPEC+ are and why it was formed.
In 1960 Saudi Arabia, Iran, Iraq, Venezuela UAE decided that we produced almost 80% of the world's oil. So that only we should fix the price of it together, there is no profit in making competition in ourself only. So they finally made an organization name OPEC with its HQ in Austria (a European country). Later more countries also join this organization. Now there is 14 country in OPEC and 10 in OPEC+. So since 1960, OPEC has been deciding the price of petrol at the world level, but later corona came, and all the Industries have been stranded in lockdown. People also got stuck in their homes and were not allowed to go anywhere, which ultimately means the petrol consumption was negligible. So there was a steep fall in the price of petrol at that time, and OPEC countries had to suffer from huge losses because the economy was only based on petrol. So that’s why they are hiking the price now to compensate for their loss. Now, you think so till when this price will be continued or is there any chance of lessening the price. To understand this, you should know about the Output pact because the petrol price is only decided by OPEC country. And there was a meeting of OPEC country, and they signed a pack called output pact. What is it?
In the lockdown period, whatever loss the OPEC country faced, they are planning to recover that. So they decided in April 2020 that for 2 years, they will lessen their production so that they can fulfill the loss that they had to face. As they reduce their production and the demand will increase, the price will increase automatically, and as they get more money for the same amount of product, the loss would be compensated. This was their plan, and it is called the Output pact. According to it, this plan was for 2 years means from April 2020 to April 2022. After that, the plan was to get normal production, but the price is already touching the cloud. OPEC country extended the pact till 6 months more, meaning there is no plan to produce the oil until October 2022.
So it is clear that there is not any chance of reduced price of petrol till October 2022. But is only OPEC country is responsible for hiked price or is there any other reason also?
This is not the only reason. There is one more reason also who is Indian govt. Now you must be thinking how? In the lockdown period, almost every way has closed to get tax from the public means the sources of Income has been closed but the expenditure of govt. It is the same as before. So govt. had only this option to get tax from the public. So govt. Added more tax on petrol and got money from public to maintain its expenditure.
By the way, Indians are also responsible for the hiked price because in this day's people have found lots of ideas or ways to evade tax. But to run govt. It is essential to get money from the public. So govt is also compelled to do that .
Technically if we want to get at least some amount of reduction in a petrol then everyone liable to pay tax, should pay their tax honestly so that govt. Will not be compelled to do indirect money levy from the public.
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