Capitalmind
Capitalmind
Actionable insights on equities, fixed-income, macros and personal finance Start 14-Days Free Trial
Actionable investing insights Get Free Trial
Economy

Why aren't we seeing fuel price cuts?

Political and Economic nightmare: World going into recession, everyone’s worried about serious asset price deflation, Auto and Steel companies are announcing big cuts, airlines are laying off staff and real estate companies are cutting prices. On top of that, three crr cuts, two repo and one SLR cut in three weeks, and situation still looks grim. Oil’s at $60, less than half of its peak four months ago.

Yet, our government isn’t cutting prices! Apart from the economic stupidity – inflation gets cut in half in a few weeks with a price cut – there is a huge political problem too. More than five states are going into elections in a month, and the general elections are a few months away. Rate cuts don’t stimulate economies – price cuts can at least provide some relief.

The time is ripe for an oil price cut – has been for a while now. No speculation of course, and all action needs to be taken AFTER an oil price cut, not before. There is just no point now – demand for petrol and diesel is dying by the day, with our own recession coming along. Without a price cut, every oil marketing company will suffer: you’ve already covered their losses through oil bonds, which we the taxpayers are saddled with. Now get off the high horse and either let pricing be market based or reduce.

It’s now bordering on silly. Oil price reductions don’t immediately pass on to prices – every person will try to book some profits on the increased spreads and hold out as much as possible. It will take three months, in everything. What can they be thinking? Is there a reason to NOT reduce prices now?

(Forget what Murli Deora says, he has his head up the wrong side – he has lied so many times it’s not even funny.)

Like our content? Join Capitalmind Premium.

  • Equity, fixed income, macro and personal finance research
  • Model equity and fixed-income portfolios
  • Exclusive apps, tutorials, and member community
Subscribe Now Or start with a free-trial