Is there anything wrong if oil prices go down?

If you remember how the world market was facing the ever-rising oil prices less than 8-9 years ago as the China’s ever growing demands for different commodities was the main cause pushing prices mainly oil which had sent it to over $140 a barrel in 2008.

But some thought that the decreasing prices of oil were causing worries to world powers for they saw it as reason of worldwide economical recession. I can understand their reasons but as far Indian interests are concerned our government is not reacting either way as the price of crude has come down  in the range of thirties. Maybe the current changes in oil prices is temporary and the oil price will again touch new lows and it will happen once the prices go up sharply yet the result will be different ultimately.

They say it’s all about demand and supply and the oversupply was certainly a factor that brought the prices down until the October of last year. There is no doubt about the fact that cheaper fuel stimulated economic growth worldwide. Particular for the industry that uses oil as its major input found more beneficial. The OPEC (Organization of Oil Exporting Countries) tried its best to see that their member countries keep the production down but the producers did not do that in their self-interests.

As far we in India there is no secret in the fact that we export more than 70% of our consumption so the lower price of crude lessens the burden on our economy. There might be some adverse effects on our economy but that would be not as bad as when the price of crude goes up in the international market and we have every reason to believe that when we are getting it on one 1/3 of the price that we used to pay until recently.

However, the fact that even if there is no reason to believe India will be a looser if the prices of crude go further down. We have passed through a horrible time when we were under a tremendous economical pressure during Iraq – Kuwait war. That war had spread a stir on the economy of oil producing countries of Western Asia and the reduced production of oil caused a steep rise in price that had its very bad effects on our economy that reduced our foreign reserves to a dangerous level.

The result of poor investment in public sector and pressure of loan repayment reduced our world credit rating especially the under par rating by Standard & Poor’s and Bond Research Institute of Japan further increased Indian worries on financial front.  International Monitory Fund thought it was the right time to slap their conditions on India and refused financial support.

The worst that could have happened was downfall of USSR, the long time of alley of India that always supported India during all challenging situations India faced and emergence of America is sole world power of world horizon.  We are far better off from that situation we faced 25 years ago and now feel proudly being among the countries progressing at the fastest rate.

Image source https://pixabay.com/en/oilfield-pump-crude-petroleum-643836/