As the country braces for a gruelling election season, the Opposition called for a ‘Bharat Bandh’ on September 10 to pressure the government over rising prices at petrol pumps.
Oil prices at home are the result of global prices and central and state taxes levied domestically. There has been extraordinary turbulence in these areas. World oil prices had reached a peak of $112 a barrel in 2014, before they began a precipitate fall, reaching below $30 in February 2016. This was due to a worldwide economic downturn and increased US production due to the shale revolution, both of which led to an over-supplied market.
Principal world producers did not correct the market imbalance, focusing instead on retaining their market share and hoping that the low prices would make US production uneconomical. However, prices continued to fall, since US production weathered the low prices.
This finally compelled members of the Organisation of Petroleum-Exporting Countries (OPEC), led by Saudi Arabia, in late 2016, to work with major non-OPEC...