Nothing greasy about it

The increase in oil prices doesn't harm anyone

 
Last Updated: Saturday 04 July 2015

Disgruntled truckdrivers may have taken to the streets. Farmers, ambulance and taxidrivers may have joined them, too. But by relenting to their demands to reduce the tax on fuel oil following a sudden jump in the price of crude, the French government has set a harmful precedent. The rise in oil prices should be welcomed. Not just for the sake of the environment, but for the economy, too (see p16-25: A renewable crisis ).

Unlike the us , where neither the 1970s nor the 1990s oil shock was able to reduce reliance on fossil fuels to run the wheels of its economy and its growing fleet of gas-guzzling sports utility vehicles, petrol is heavily taxed in many countries, including several in Europe. The revenue earned is meant to promote research on alternatives and curb wasteful use of oil. Hence, the September 7, 2000, oil shock gives most nations a great opportunity to take the bull by the horns. The increase in the price of crude will mean a consequent increase in the gross tax revenue from this source. This should be used to further reduce reliance on fossil fuels -- diesel and petrol; and make renewable energy a more attractive investment.

The price hike is good news also for developing countries, like India, too. Here, the economy has just begun to industrialise and motorise. The hike should, therefore, be seen as the chance to tap all renewable sources of energy, boost their penetration into the market so that they can eventually be priced at par with fossil fuels, and conserve oil. As the use of the technologies spreads, they will become cheaper and more acceptable. Development in the third world will be clean and not follow the highly toxic model that cheap fossil fuel promoted in the West.

Meanwhile, it is absurd to attack the Organisation of Petroleum Exporting Countries for the increase in the price of crude. They have every right to decide the price of their natural resource. If penury-stricken Bihar in India could raise the price of its coal, the state would never be short of funds.

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