The hike in the oil prices in India is the front headline of newspapers and news channels nowadays. This rise in the price of oil is continued from the onset of 2021 and does not seem to stop or get reduced. Every day people wish that now the price will get lowered but in spite of getting lower, it is increasing day by day. Every day the leaders of some of the parties or common people are protesting against this hike in the oil price hoping that the price might get lowered. I hope that we all are aware of this issue that the people of the nation are facing at present.
This topic is also important for the students preparing for the competitive exams.
Few Lines Essay for Increasing Oil Prices
1) Oil prices are increasing drastically in the world.
2) From June 2017, oil prices started increasing at a great speed.
3) It has increased more than 70% in the past few years.
4) Increasing oil prices will affect the stock market.
5) Increase in demand and supply restrictions will lead to increase in oil prices.
6) Hike in the prices of crude oil is hitting petrol and diesel prices.
7) It will also increase the transportation and production charge.
8) It has reduced the GDP and hence the economy of the country is affected.
9) Recovering from the pandemic is another reason for a hike in oil prices in 2021.
10) According to 2016 report, the world is left with 1.65 trillion barrels of oil.
11) By seeing the consumption rates, we have 47 years of oil left.
12) Venezuela has the largest oil reserve in the world.
13) Some oil supplier countries include Saudi Arabia, United States, Iran, Russia, Venezuela, etc.
Long Essay on Effects of Rising Oil Prices on the Indian Economy
I have tried to provide detailed information about this topic in the form of a long essay. I hope this might provide an idea to the students about writing an essay on this topic. Moreover, it would aid in enhancing the knowledge of readers about this relevant topic.
1000 Words Essay – How Hike in Oil Prices Causes a Negative Impact on the Indian Economy?
Introduction
The rising price of oil is bothering the people of India since the beginning of the year 2021. There are many people who could not afford to cope with such a high price of oil and therefore have reduced the use of vehicles for traveling. This hike in the price of oil does not seem to stop here but is likely to rise more in the future. We will be discussing the major cause and the effects of this hike on the economy of the nation.
Crude oil- A Vital Requirement of the Nation
Crude oil is a non-renewable energy resource and is extracted from fossil fuels embedded deep inside the earth. Crude oil is a very important energy source for carrying out different activities in India. The absence of this oil will drastically impact the industrial and transportation sector of the nation. The maximum percentage of crude i.e. 70% oil required in the nation is being imported from the other oil-producing countries. The fulfillment of this demand for oil in the nation with such a hike in price is really a challenging one. It might put the people and economy of the nation in a serious problem.
The Trend of Hike in Oil Prices
The fluctuation in the price of oil has occurred several times in the world. The countries like Iraq, Iran, Kuwait, Saudi Arabia, Venezuela have formed an organization in the year 1960 called as Organization of Petroleum Exporting Countries (OPEC). This organization controlled the global price of oil after its formation for a decade. The prices have increased many times in the world during times of war or recession. The system of fixing the standard price of oil had changed to fluctuating oil prices in the year 1987. Further, the high fluctuation in the price of oil has been observed from the year 1996. The price of oil did not reduce even when the production of oil was high.
The reduction in the price was noticed during the Iraq war in 2003. This again was followed by the increase in the price from 2004 and this trend of increasing of the cost of oil is continued till date. There was a tremendous decrease in the demand for oil and its price during the year 2020. It was due to the lockdown in the entire nations of the world and the Russia- Saudi Arabia oil price war.
The Reasons Contributing to Hike in Oil Prices
- Increase in Global Demands for Oil- The increase in demand for oil in different countries is the most important factor for increasing of price of oil globally. Rapid industrialization, urbanization, population explosion are the major for an increase in the demand for oil in different nations. Moreover, the demands have increased drastically in 2021 after improvement in the pandemic situation. This disbalance in supply and demand equilibrium is resulting in oil price hikes.
- Population Growth- The increase in population results in increasing the demand for oil. It is because more people will be requiring more vehicles and that will require sufficient oil for transportation.
- Reduced Production of Oil in Oil Exporting Nations- The reduction in the production of oil in the oil-producing and exporting nations is a serious concern. The oil-producing nations are interested in exporting crude oil at higher prices for getting benefitted. The reduced quantity of oil is not sufficient to meet the demands of the different countries around the globe. As a result, the increase in the cost of oil is increased globally. This has a severe impact on the economies of developing nations like India.
- Wars and Disasters Leading to a Temporary Fluctuation in Oil Prices- The occurrence of natural disasters or man-made disasters in the oil-producing nations result in fluctuation of the price of oil in the world. Wars and disasters are challenging conditions. It is because of the after-effects of such threats to the oil fields and refineries.
Does Hike in Oil Prices Causes a Negative Impact on the Indian Economy?
The demand for oil had drastically decreased during the year 2020 because of the pandemic situation in the world. The restriction imposed on traveling and the long closure of transportation in India had resulted in lowering the demand for fuel in the market. This lowered price of oil attained a hike at the onset of the year 2021 and is still following the trend of rising. The price of oil at present has reached 80$ per barrel in India. Most probably it may cross 85$ per barrel in the coming days.
The hike in the price of oil is having a negative impact on several factors like the stock market, currency, inflation, transportation and production sectors, and expenditure of the government. This may cause a severe impact on the economic condition of India. The stock market is also affected by the increase in oil prices. This might either have a negative or positive impact on the economy and that depends upon the shares of the company. The demand for oil in India is high because of its high population and thus to fulfill this demand the nation has to import more than 70% of oil from other oil-producing nations. The nation will have to pay higher costs if the oil price is high. This will diminish the value of the Indian currency. Moreover, the increase in the expenditure of the government will result in a fiscal deficit.
The hike in oil prices will also result in an increase in the transportation and production charges of different goods in the nation. This will result in a high price of the different goods for the customers. The fare of the public transport is likely to increase as the result of the high oil prices. Thus, the rising trend of oil prices in India is causing an adverse effect on the economic condition of the nation.
Conclusion
The rise in oil prices is rising every day in India and the world. This rising trend in oil price is expected to be continued in the coming days. It will upset the economic condition of the nation as well as the people of the nation. Moreover, the high taxes on fuel in India are adding an excessive cost burden on the people. The day is not far when people will choose to use a bicycle instead of using a vehicle running by using fuel. The rise in fuel prices is also seems to be enhancing car pooling instead of using the personal vehicle for travelling. This shall be a better step towards protecting our environment.
FAQs: Frequently Asked Questions
Ans. Indian economy is a type of mixed economy that includes both the public and private sectors.
Ans. Indian Oil Corporation has the highest number of oil refineries in India.
Ans. The oil price was highest in India i.e. 156$ per barrel in the year 2008.
Ans. The Iraq-Iran war was the reason behind the 1980 oil crisis in the world.