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Volatility

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Submitted By shahineelima
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Energy sector will continue to suffer | In the first nine months of 201314, India imported a little over 3.8 million barrels of crude oil a day – overtaking Japan in import volume. This makes India the third- largest oil importer in the world, behind China and the US.By 2020, the International Energy Agency ( IEA) estimates India will become the world’s largest oil importer. The Indian government, meanwhile, hopes it will achieve energy sufficiency by 2030, making imports unnecessary. It is very unlikely that IEA and the government are both correct in their projections.Note that China has roughly 4.5 times India’s GDP and the US GDP is almost nine times as much as India. India’s oil consumption will rise inevitably as its economy grows larger. By the 2030s, India will need about eight million barrels a day, going by expected GDP and population growth.As of now, India produces slightly less than 0.5 million barrels of crude a day and ramping up domestic production 16 times in the next 15- 20 years would border on the miraculous.It is also difficult to imagine an energy substitution process that drastically reduces the need for crude. This would require major technological breakthroughs.Most likely, India’s import dependency will rise substantially, to around 95 per cent of consumption. This is likely even if domestic sources are tapped efficiently; unconventional shale and coal- bed- methane are developed; massive substitution results via renewable, etc. Most First World nations are net oil importers. None of the importers offer subsidies on acommodity they must import. All ensure fuels are priced at market prices and most add punitive taxes to ensure there isn’t wasteful utilisation. Indian policy should have gone the same way. There should have been an attempt to empower Indian oil and gas explorers and producers.Policy should also be designed to encourage...

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