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Oilcos plan to ration fuel supply

For discussions of events and conditions not necessarily related to Peak Oil.

Oilcos plan to ration fuel supply

Unread postby PeakingAroundtheCorner » Sat 17 May 2008, 16:25:49

Oilcos plan to ration oil supply

NEW DELHI: Fuel consumers in the country could be in for some hard times if the threats by oilcos are to be taken seriously. Oil marketing companies are planning to cut supplies of cooking gas, diesel, kerosene and even petrol. The cash-strapped companies—IOC, HPCL and BPCL—have told the government that they would soon be forced to impose quotas for consumers of cooking fuel even while completely stopping new connections.

In an election year, however, it is unlikely that the government will allow companies owned by it to go ahead with their threat. An official in the oil ministry said, “Oil PSUs have not taken any such decision. OMCs give several suggestions, including increasing prices of auto fuel, LPG and kerosene. The government considers all suggestions and takes the most appropriate action in the benefit of all.”

Top honchos of all the three oil companies met petroleum ministry officials earlier this week to apprise the government of the growing losses. “Demand will have to be restricted to supplies. We are not in a position to import anymore. It is no longer a question of making profits. We do not have the cash to import and meet the demand,” the top boss of an oilco said.

Pushed to a corner, the oilcos have suggested some radical measures to cut losses. These include no additional LPG connections, quota per family, no imports of diesel and petrol, and continuance of quota for kerosene. “Subsidies and quotas go together. If prices have to be subsidised and kept at artificial levels, consumers need to start getting used to rationing as well,” a senior oil company official said. According to OMCs, their under-recoveries are expected to be around Rs 180,000 crore in the current fiscal.


Well, guess we can take the "dia" part off of "Chindia" as India plunges into crisis head first.

“Demand will have to be restricted to supplies. We are not in a position to import anymore. It is no longer a question of making profits. We do not have the cash to import and meet the demand,”

If my tinfoil hat wasn't still in the shop for repairs, I might get the idea that poorer regions are being priced out of the oil market in order to direct supplies to more affluent regions.
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Re: Oilcos plan to ration fuel supply

Unread postby PeakingAroundtheCorner » Sat 17 May 2008, 17:03:32

Drivers face fuel ration shock

FUEL rationing may be one in a series of shocks facing drivers and commuters in Queensland.

Looming oil shortages would produce the biggest change in society since the industrial revolution, Sustainability Minister Andrew McNamara warned yesterday.

A report by Mr McNamara for state Cabinet on the impact of the fuel crisis is expected to include recommendations on rationing, the future of public and private transport and sustainable population issues.

It has been ordered on the premise there is overwhelming evidence world oil production will peak in under a decade. It is expected to recommend risk mitigation measures such as cuts in fuel consumption and encouraging the development and use of alternative fuels, technologies and strategies.

It will also outline demographic and regional changes as Queenslanders change travel, work and living habits.

"I think people are going to be in for a shock when they find it's too expensive to drive their cars to work and then, when they get down to the station, they find the train is full and they can't get on board," Mr McNamara said.

-snip-


This is getting scawier and scawier by the minute...
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Re: Oilcos plan to ration fuel supply

Unread postby Gerben » Sat 17 May 2008, 17:12:41

The situation in India is not about pricing out of the market. It's about price controls. The oil companies cannot raise their domestic prices, so they will lose money if they import expensive foreign oil. The oil companies want the government to raise the prices, but ofc the government is reluctant to do that. The situation is quite similar in China. If the price goes up, then the poorest won't be able to buy fuel any more. It's a choice between price controls or world market price. Shortage or scarcity.
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Re: Oilcos plan to ration fuel supply

Unread postby seahorse » Sat 17 May 2008, 17:17:42

Gerben,

Do you think the supply is there even without the price controls? I agree with PAC, it seems the West will continue to get the oil that is there.
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Re: Oilcos plan to ration fuel supply

Unread postby cube » Sat 17 May 2008, 17:42:40

Gerben wrote:If the price goes up, then the poorest won't be able to buy fuel any more.

I think "price controls aka rationing" is more advantageous for the politicians. With rationing nobody gets as much as they want but at least everybody gets to have some oil both rich and poor people. However without price controls the rich can have as much as they want while the poor can only have as much as they can afford which will be significantly less.

I think at the end of the day regardless of what government action is taken, that does NOT change the amount of total oil consumption. It only changes who gets to have it. (all for the rich or a little for everyone)
or perhaps not?----->with rationing it is a guarantee that some poor person will sell their oil to a rich person through the black market for a higher price. So what is the lesson learned here folks? It is advantageous to be rich because you always get what you want, regardless of the law! :-D

my 2 cents
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Re: Oilcos plan to ration fuel supply

Unread postby Gandalf_the_White » Sat 17 May 2008, 18:20:01

cube wrote:
Gerben wrote:If the price goes up, then the poorest won't be able to buy fuel any more.

I think "price controls aka rationing" is more advantageous for the politicians. With rationing nobody gets as much as they want but at least everybody gets to have some oil both rich and poor people. However without price controls the rich can have as much as they want while the poor can only have as much as they can afford which will be significantly less.

I think at the end of the day regardless of what government action is taken, that does NOT change the amount of total oil consumption. It only changes who gets to have it. (all for the rich or a little for everyone)
or perhaps not?----->with rationing it is a guarantee that some poor person will sell their oil to a rich person through the black market for a higher price. So what is the lesson learned here folks? It is advantageous to be rich because you always get what you want, regardless of the law! :-D

my 2 cents


Prolonged rationing would destroy any western economy because then the government is prioritizing use. So who gets to take a vacation? If supply get's tight enough that you only get what you need to go to work, large portions of the economy go dark and demand is destroyed, ie recession by fiat.

Let the market price people out of oil but do not tell everyone that they get a ration of gas. The market will open the door for some type of move to alternatives, rationing makes us all slaves in the end because we remove opportunity from society, therefore in the extreme civil unrest is almost assured. Unless the people have been conditioned to accept such control (as they once did in the former Soviet Union.) The United States would implode within one year under a pervasive rationing.

Fortunately though, our wealth though largely mortgaged now is still such that we can pay the higher prices and direct supply to ourselves. Thge price we will pay for our dependence is greater than that of poorer nations, but we will not be the first to really feel the call to go cold turkey. The poor in America will suffer in silence for a while while the middle class and above make excuses.
I return to you now at the turning of the tide.
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Re: Oilcos plan to ration fuel supply

Unread postby Gerben » Sat 17 May 2008, 18:40:58

seahorse wrote:Gerben,

Do you think the supply is there even without the price controls? I agree with PAC, it seems the West will continue to get the oil that is there.

No, there is not enough oil on the market. If they bought foreign oil then the price must go up until sufficient demand destruction has taken place.
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Re: Oilcos plan to ration fuel supply

Unread postby ohanian » Sun 18 May 2008, 05:23:23

Here is a solution.

How about we pay the poor people money if they promise not to buy any oil.

This will reduce the demand for oil.
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Re: Oilcos plan to ration fuel supply

Unread postby americandream » Sun 18 May 2008, 05:45:23

ohanian wrote:Here is a solution.

How about we pay the poor people money if they promise not to buy any oil.

This will reduce the demand for oil.


Presumably you are upper middle to upper class my friend?
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Re: Oilcos plan to ration fuel supply

Unread postby paimei01 » Sun 18 May 2008, 07:12:35

No cooking fuel = cut down the forest ! I mean who will eat uncooked rice ? People will burn whatever they can, and when there is nothing left, the apocalypse will begin. It already started anyway.
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One day there will be so many houses, that people will be bored and will go live in tents. "Why are you living in tents ? Are there not enough homes ?" "Yes there are, but we play this Economy game". Now it's "Crisis" time !Too many houses! Yes, we are insane!
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Re: Oilcos plan to ration fuel supply

Unread postby Dan1195 » Sun 18 May 2008, 08:07:57

We are beginning the to see the second stage of Peak Oil. The first has already occurred with the 3rd world being mostly priced out of the market. This started a few years ago. Now we are are seeing the developing world, including India and China, choose between raising the price and outpricing the poor and simple rationing.

I guess the big question, which no one really knows the answer too, is how long until fully developed countries face the same choice. The U.S. can outbid everyone for crude and Gasoline until the poor cannot afford it, which is likely more acceptable politically as it is a "slow death" as opposed to a sudden jolt from shortages. Of course if mutliple countries do this you get a parabolic price rise. Whether we are actually seeing the "knee" of such a price rise curve right now remains to be seen. I presonally believe we can get at least into mid late 2009 before the price curve truly shows parabolic tendencies.
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Re: Oilcos plan to ration fuel supply

Unread postby mos6507 » Sun 18 May 2008, 15:29:16

PeakingAroundtheCorner wrote:If my tinfoil hat wasn't still in the shop for repairs, I might get the idea that poorer regions are being priced out of the oil market in order to direct supplies to more affluent regions.


The free market leads to this without the need for any elaborate conspiracies.
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Re: Oilcos plan to ration fuel supply

Unread postby Homesteader » Sun 18 May 2008, 15:58:51

Dan1195 wrote:
The U.S. can outbid everyone for crude and Gasoline until the poor cannot afford it, which is likely more acceptable politically as it is a "slow death" as opposed to a sudden jolt from shortages. Of course if mutliple countries do this you get a parabolic price rise.


I don't think China et al will continue to finance the U.S. outbidding them for oil thru buying U.S. debt once the writing is plain to see.

The process of not buying U.S. debt may have already started.
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