ACE Season 2 Case Study Challenge

7/27/2019 ACE Season 2 Case Study Challenge

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WE FUEL AMAZING

S E A S O N 2

Case of oil subsidies:

are we stealing from

future generations?

case study challenge


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S E AS O N 2 ace c s | 2

Foreword

Prom oi b kow o m iviizio

or o im. Oi, i pr, r o r pr o r rqirm i wor. I impor r ir mi rpor . t ivio o irombio i, ri i ommri viio, impor o prom o iriori mir, prir i

o pi, riizr, ov, iv

pii v boo i ompio.Oi ompio pr o o r

i oow: erop ai- 32%, Mi e- p o 53%, so cr amri-44%,ari-41% nor amri 40%.I Ii 23% o o r ompio wro oi (2011).

I 2011, oi- ompio bii worwi r im o v o us$523 biio, us$ 111 biio ir i 2010.I prir, bi poi i o poii iiv, p mbiio o rormor i o i b poii rii or .I OMc r o q i ir r rovri r i irik i oo o o rii bor, i b o OMc o m io i rii. ti i r, o o o oi ppbrkow ri i imm pbi rip b o vr imp bkim rom wr b i or.


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S E AS O N 2ace c s | 3

Subsidy

I Ii wr, oi bi biori w b vrpowr oo or oomi poi mki r-oio o ror. howvr, bir if or rm i o io o ommo pop bi wb r o poii ir. apoii i i o xrm i o rp r xii bi. Probb o wo bi o boi bi i o ow ommo pop, wi r mbr, ow ir

iv wo b m br i mo p obi i iz orwi.

Oi bii b provi i oowiorm:

1. dir Fii trr

2. Prri x rm

3. tr rriio

4. Oi r rvi io r

5. Rio o r or

sbii or r b bro i pror bii or omr bii.Pror bii r provi o ompio or ivm ir op.comr bii, m impi, ppor ompio o r, b owri pri wi r pro r o. gov. o Iirr xri ompio bi.

Rationale behind Oil Subsidy

t i bi owri pri o oi robi i o mk r i orm o oivib o ommo pop, pi o poor. s bi o im o pro omi omr rom or fioi irio mrk. Oi bi, ror,

mk oi r i Ii mororb o pbi.

Morovr, oi pri i Ii v i pi ovr. Mo o oi i rporio ooo ommoii. Mrk pri o irommoii i ir rporio o orri r or i m ivr rom or o iio. so, ir i oipri wo m ir i ri r ir i ommoi pri. ao, pro b-pro o oi rri r i vrioiri. I oi pri o p, pri o pro o iri wo o o p. a

wo o ir pri v rio ifio. so, rom i prpiv oi bii oi r job o provii orb o oroi ifio.

B i i o o pr o or. Oi pri oroi bi i irik wi o m vrio orio irio or i io b i ioio.

Nature o Oil Subsidy in India

lPg, Pds kro i r o o rir irio mrk pri.tror r i p bw o pri(ii mrki o) i pri.t gov. provi bi or lPg kro. B bi i o oo bri p bw o pri i pri. tror i pi o gov.provii bi r rmi pwi i r rovr. ur rovr ir ir bw o pri r pri wioi or bi. a r pr o r-rovr i omp b gov.b i (i iio o bi) or bi k i k r o b ii rom prm nio Oi compi(nOc).t r o i i bor b Oi Mrkicompi (OMc).


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c i i o rom b i o or xpir. t

i i pi o x-o bi i.. r r-rovri v irr. tror OMc o r o ivib i or r ror o rii o.

t oowi r ow ow ovrmr i r-rovri rom2008-2011 (t i m wr i 2008).

Consequences o subsidies

Fiscal defcit

sbii pi imp bo or. t bi o prom

ompi i Ii i 201011 w InR 2,904ror (us$637 miio). I iio o

bi, ovrm o r io OMc i orm o oi boo r r-rovr br. I 201011,

i i mo o InR 41,000 ror(us$8,995 miio) (MoPng, 2011).

I 2012 RBI :

t r r x i brproviio or prom bii iiiio proviio (R. 300 biio) i oppmr m or r pr inovmbr 2011. I i im irxpir o prom bi o riv p i b ro 0.8 pr poi

o gdP or 2011-2012.

Black market

sbiiz omi lPg kro rvib m pr r or i or mi or iriprpo bo oro o Pds. a pro im, 40% o Pds kro wmix wi or w bi oro-Pds o-oo prpo (ncaeR2005).

Impact on Public Sector Oil Companies

ur-rovri r r b bo prm owrm ompi. so, bii v imp o prom or wo.uprm oi ompi, m Oi nr

g corporio limi (Ongc) Oi Iilimi (OIl), r oi o owrmrri io r owrmompi o br porio o r-rovr br. I 201011, br bor bprm owrm ompi w InR30,297 ror (us$6.65 biio) InR 6,893ror (us$1.51 biio), rpiv. ti oo fow probii o oiompi vr b o ir prmor rom ivi i improvi xpiir xporio proio oprio.


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t prm Psu k p xporio proio ivii wi om ooiprr wo i pb o ri oprio

o b o Psu. B xporio i i ivi wi i i rik privov i i o v ivib. B prm ompi r ii br o oi bi irivib r oriv pr & x e&P ivii.ti im r i mbr o oibi iovr mbr o oiw rom wi oi b im xr. I i r omi oi proioi Ii ri i ir o impor oi.ti o o r Ii r ib o p Ii orx rrv roi i w p i usd. I o Rpx r ir oi m wkRp. amo prm ompi, Ongcbr r br o o bioow b OIl g aori o Ii limi(gaIl). s r bow:

I i impor o o bi i i provi o o pbi orompi. Priv ompi r r o mrk pro ompiiv mrk pri.B i o o mk ir iv ir.O orr, ir mrk pri mk iompiiv or priv ompi o ri pro; ror, wi priv priipioi iri i xporio, proio

ri o prom pro, r i prio priv priipio i mrki (pro, i, lPg kro).

Do the poor really gain?

Liquefed petroleum gas(LPG)

I 200708 o ro 8-9% o rrpopio om lPg primr orooki, ompr o 62% i rb r (nssO,2010). ao lPg i biiz o m rqirm o poor, i ri rrr o lPg i om b oomi w-o rb oo (goI, 2010b).aori o rir b t er Ror

Ii (teRI), 76% o lPg bi o orb r r 40% o lPg bi ijo b wi 6.75% o popio(cw ., 2005).

Diesel

amo 60% o i om i Iiw i rpor or, o wi 54% wom b ro rpor or (goI,

2010).Wii ro rpor or, ompio o biiz i b privvi ir bi; r i rr xrb b pri irbw pro i.

PDS kerosene

Pds kro w opi biio ir i ibii o poor. I rrr i i primri or iiprpoo 1.3% o rr oo i orooki (nssO, 2010). howvr, i rb r,8% o oo kro or ooki.I 200708, 39% o rr 5.1% o rboo kro primr orii.


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Q

1. Who, in your opinion, beneft the most rom the Oil Subsidy? Are they theintended targets or which subsidy were conceived in the frst place?

2. How does subsidy impact the upstream oil companies? Does it aectIndias position as a net importer o oil?

3. I subsidy is abolished or reormed what sort o reorm is required?

4. Are you or or against oil subsidy in todays world? Why?

Opportunity cost, Environment and longterm energy security

combio o oi i o o bioribor o ro vrpo ir. no o , m o b-pro o oi r o zro o virom.sbi o oi iiv or ovr- o i. I oibi wr boi m mo wov b iz o ivio iovri o riv ri. tri r r r, rr morib, i o o rm r ri.

I ir o prov o b pr riii ivm i i wo o br or Ii o br br ooi bi. Rr, rom bi ob ii or rr improvm o or ivir.

Concluding thoughts

Oi bi, o o ompio bi,

r mi o vr oq.som r immi om r i r-. I imp i, x r, poibii o rr o riv r ovr ivi r o or or. Morovr,b o ovr-, w m bprivi or r rio. t moo oi w ppo o b om ovrrio i mok p b o rio ob or im bi i i rii m

pr or orm o r. Prpi i im w opp, ook bk porovr or ow oopri wi r i rr,pr rkr wi vr pi r.


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Year Consumption (Thousand barrels/day) Change

1980 59,928.84 na

1981 58,013.31 -3.20 %

1982 56,722.96 -2.22 %

1983 56,002.25 -1.27 %

1984 57,064.08 1.90 %

1985 57,382.49 0.56 %

1986 58,996.11 2.81 %1987 60,385.75 2.36 %

1988 62,269.80 3.12 %

1989 63,497.39 1.97 %

1990 63,875.13 0.59 %

1991 66,970.88 4.85 %

1992 67,136.27 0.25 %

1993 67,587.53 0.67 %

1994 68,927.09 1.98 %

1995 70,130.20 1.75 %

1996 71,712.41 2.26 %

1997 73,459.28 2.44 %

1998 74,109.43 0.89 %

1999 75,872.74 2.38 %

2000 76,779.14 1.19 %

2001 77,468.54 0.90 %

2002 78,163.60 0.90 %

2003 79,708.27 1.98 %

2004 82,564.87 3.58 %

2005 84,067.14 1.82 %

2006 85,132.05 1.27 %

2007 85,901.96 0.90 %

2008 84,463.22 -1.67 %

2009 84,756.56 0.35 %2010 87,371.34 3.09 %

2011 87,356.29 -0.02 %

Appendix

Global Oil Consumption over the Years


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Acknowledgement

oi bi - t eoomi tim

www.ixmi.om

www.ii.or

www.rii.or

Reerences

Iea, Wor er Oook 2012

Iea, so ai er Oook 2013

gOI, Rpor O t commi O Romp For Fi cooiio, spmbr 2012

p://ri.oomiim.iiim.om/2013-08-26/w/41455220_1_p-r-ii-oi-orp-io

p://.wikipi.or/wiki/er_bii

p://oomiim.iiim.om/opi/oi-bi

p://www.bi-r.om/ri/oom-poi/mi-op-or-50--i-oi-bi-i-14-113052300894_1.m

p://oi.wj.om/ri/sB10001424127887324463604579040611737389236.m

p://www.ibii.om/r/oi-bii-poii-r-oomi-/ri4458680.

Indias Oil Production and Consumption

Indian Subsidies

ACE Season 2 Case Study Challenge

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