Indians pay among the highest prices for petrol globally, because of taxes, even as oil is close to multi-year lows. How can these two extremes be aligned? The ongoing turmoil in the oil markets due to the pandemic and under-utilised supply presents a long-term opportunity for India to secure its energy future.
Simply, India can take small stakes in the listed oil and gas companies of democracies such as the United States (US), Canada and Australia, via a specially created sovereign wealth fund (SWF). India is currently the world’s third- largest consumer of oil with growing demand and limited domestic supplies. Import in 2019-20 was 1.6 billion barrels and will increase as its economy expands.
Some analysts believe that the big thrust on electric vehicles (EVs) will spell the end of the oil age. But will it? Electric cars still account for less than 2% of all cars sold worldwide and there are no alternatives for heavy trucks — the biggest oil consumers in India.
EVs depend on the reliability of supply chains for key minerals — rare earths, lithium and cobalt — the majority of which are from, or controlled by, China. For a range of reasons, the obituary for oil looks premature. India’s oil demand is set to rise in the foreseeable future.
Luckily, the energy market is currently in India’s favour. This is due to increased oil production in the US and Canada over the past decade, which has brought down the price of oil.