Jun 15, 2008

Inflation, Crude Oil Price - Soars High

Jun 15, 2008

One of the Hot topic that every one needs to get a solution is Inflation, Inflation is worrying one currently threats world wide and mostly in ASIA, especially in INDIA.

We can explain it by 2 ways. 1. Cost Push Inflation, 2. Inflations due to Increase in Oil Prices. These are the Major threat in ASIA, where this mostly affects the last people of the country.

All this is happening due to FUEL Price Hike under one thought “Demand Increases and so the Price”. But some analysts Says it is due to the Speculators who leads in Market..

Today(June 15, 2008) in India the Inflation rises to 8.75% which is a 7 year High, The inflation rate is now at its highest since February 2001 and well above the government's target of between 5% and 5.5%. Transportation matters in all concern: Transportation Indirectly Increases the Price Hike, due to the increase in fuel prices, transportation sectors are forced to increase their Transportation charges which in turn increases consumer goods and all the other prices,

Analyst Fear that Inflation will increase upto 9% which is 13 year high.

The sudden jerk is due to increase in Fuel Price, but It can’t be affordable even for some Oil Delivering Companies in India, because they already in their loss, Indian Oil Corporation (IOC) One of the biggest in the nation suffered a loss of Rs. 414.27 Crore INR which is equal to $96.6574764 Million US Dollars.

Not only this there are several reasons for crude oil price hike..

1. Increased global demand. Countries with huge populations like China and India shows a rapid growth in its economy leads the people to trade

liberally all over the nation, so the demand is very high.. (Whenever if the demand for a product goes high, it ultimately increases the products cost)

2. Production has decreased. In france and other countries the demand is due to some other reasons and in UK it is due to 50% of tax. which is called as windfall taxes.. this windfall taxes is due to some environment concerns.

3. Due to Speculators. For their future concern the speculators bid for oil expecting the price to go higher, they just expect that could create demand rise and production decrease by doing so, due to this price is hiked.

4. All trade is being done using USD and so it also depends on the dollar value, for the past US mortgage crisis, it affects a lot if dollar is too weak then it buys less oil, so prices per barrel rises..

it also depends on some countries bad economic Policies..

International crude prices topping 135 dollars a barrel. In india The three firms are currently losing Rs 450 crore in revenues on fuel sales every day. Petrol is being sold at a loss of Rs 16.34 ($0.38) a litre, diesel at Rs 23.49($0.54) per litre, LPG at Rs 305.90($7.137) per cylinder loss and kerosene at a discount of Rs 28.72 ($0.66)per litre.

Perhaps 60% of Crude Oil pice is purely a speculation

Energy costs make up 14.2% of the inflation index. In addition to fuel and food price rises, some analysts have forecast that transport and feedstock costs will rise within the next two to three months.

In India the percentage of cost push inflation is some what low, but after increasing in Crude Oil Price it too gets it own way to the peak.

We just discussed the Inflation in Oil Price Hike trend, but there are also inflationary action is going on in Oil wealthy countries like Saudi Arabia too.

What is the solution to this threat, some analyst also warned that it is harder to reduce the Inflation.

But the conclusion is a big speculation and demand alone...

It is like all the nation will suffer a big loss without any war. Government must change its economic policy which never affects the Rupee and Dollar value at any cost, it is the vital role for the Government, else every one in the Future then advised to practice for their Stone Age.

Comments are most welcome for the factor to reduce Inflation.

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