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Feeling the Pinch

The worry over fuel prices is a feeling that is shared across the globe.

Published: September 8, 2013 5:15:42 am

There was much furore last week when Petroleum Minister M Veerappa Moily talked of considering shutting down petrol pumps at night,as part of austerity measures. As the “idea” raised an uproar,he was quick to backtrack. With rising international crude oil prices,however,India is not the only country feeling the petrol pinch. The worry over fuel prices is a feeling that is shared across the globe.

What dictates petrol prices

The rise and fall in petrol and diesel prices depend on the cost of crude oil and the total demand for crude worldwide.

Weak economic conditions worldwide in 2008 and 2009 led to less demand,which pushed prices down. With the world economies recovering,demand is rising again.

But unrest in the Middle East and North Africa has put supplies at risk. This combination of rising demand and reduced supply has led to higher prices of crude,which ultimately means you have to shell out more.

Who pays what

The price paid by consumers in different countries largely depends on the national pricing policy.

Petrol is cheapest in Venezuela (less than Rs 2 per litre) because of huge subsidy on fuel.

In the US,the world’s largest consumer which accounts for about 44 per cent of the global petrol consumption,the fuel costs Rs 63.

At Rs 185 per litre,petrol is the most expensive in Norway. Turkey and the Netherlands are at number 2 and 3,respectively.

Most European countries levy high taxes on petrol. In the UK,the fuel costs Rs 142 per litre.


* In 2005,the Iraqi government issued a directive that drivers could use their cars only on alternate days due to petrol shortage. Cars with odd numbers were allowed one day and those with even numbers the next.

* In the months preceding this order,the government ordered that people can fill up their tanks only every other day and then one in every five.

* 450 employees of the Iraqi ministry of oil were also sacked that year,after it was discovered that they had siphoned off thousands of gallons of petrol for illegal sale.

Sierra Leone

* In January this year,the Sierra Leone government imposed restrictions on fuel deliveries to deal with a shortage when shipments from Ivory Coast and Benin stopped. Though situated in the oil producing Gulf of Guinea,the country’s not a petroleum producer and relies entirely on imports.

* Fares of motorbike taxis,one of the few means of navigating the capital’s streets,doubled during that time.


* In 2010,petrol rationing was introduced in France as more than a quarter of the country’s 12,500 petrol pumps went dry. Petrol stations started limiting fill-ups to 30 litres for cars and 150 litres for trucks.

* The government also urged British holiday makers heading to France to ensure they had sufficient fuel to complete their journeys.

How the world responds to fuel price hikes

United States

In 2008,hit by rising petrol prices and a sagging economy,Americans started driving less in their fuel-guzzling vehicles. Sales of pickup trucks,minivans and sport utility vehicles fell drastically as people started opting for public transport instead.

United Kingdom

Escalating protests over fuel prices caught the government and motorists by surprise in 2000. Hundreds of lorry drivers blocked routes from refineries,leading to panic buying in the country and forcing the government to intervene.


Furious Nigerians took to the streets last year,staging ‘Occupy Nigeria’ protests after the government ended oil subsidies that had kept gasoline prices low. The cost of a litre of gasoline more than doubled overnight. More than a dozen were injured in the protests.


Earlier this year,students and workers took to the streets after the Indonesian government raised fuel prices. To help the poor cope with higher fuel prices,the government pledged to provide direct cash assistance to low-income families.

Rahul Sabharwal

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