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Just Shoot Me

Bala, 28, Gordon Gekko in the making, pseudo-intellectual, cynic, bibliophile, obsessive compulsive ranter...

The smartest players in the game

June 04, 2008

With rising petrol prices and all that, i was thinking about the players in the game. Consider the variety of players involved :

1) Heavy oil consumers with low petrol prices
eg. China and India - we are the worst of the lot. We have a huge oil import bill, which eats into our forex reserves. Yet we render Petrol inelastic by coddling the consumer with heavy subsidies. So like a crack addict feeding his (expensive) habit, we live from one oil induced high to another. And someday our Forex reserves will run out or our subsidies will bankrupt the state run oil marketing companies and we will go back to bicycles and bullock carts.

2) Heavy oil producers with low petrol prices
eg. venezuela and saudi arabia. They make tons of money off the oil exports and then coddle their own population, with ridiculous subsidies on petrol (petrol costs around Rs. 2 a litre in caracas). They may be better off now, but when the oil runs out.. mavanae dinnu thandi..

3) Heavy oil consumers with untapped reserves
It's just like America to sit on a pile of gas reserves and run around waging wars in the world to secure future reserves. They wage $3 Trillion wars to secure $2 billion per annum oil flow.

4) The smartest players in the game - Norwegians.

They have 40 years of reserves left at current production rates. They pump a lot of gas. They tax their automobiles to death. They do everything in their power to drive their population away from oil addiction and Petrol sells for 112 Rs a litre in Oslo. And what do they with all that money earned by oil exports? -They run a sovereign wealth fund to secure their future for the day their oil runs out. And they have been doing this since 1990!!!. And their fund is roughly worth $300 billion!!!.

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posted by Bala, 4:30 PM


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