Rise in prices of crude oil


The world faced an oil price bubble in July 2008 when crude price hit an all-time high of $147 or Rs6,333. While the dollar price of oil is about 33% lower than that now, the Indian price has breached the all-time high. This is because of the massive devaluation of the India rupee, which reflects, among things, the massive loot and inefficiency by a regime led by a trained economist, Dr Manmohan Singh

A few days ago, crude oil price quoted on the MCX surpassed the all-time high price of Rs6,333, made in July 2008. How? The culprit is a weak rupee which has made oil asexpensive as it was when international oil price was about 50% higher. At that time in 2008 the world was in the grip of the fear of a runaway rise in theprice of oil. Global oil prices went parabolic as speculators and large institutions pushed up the price backed by the idea that the world was running out of oil. “Peak oil” theory was a rage. Oil hit an all-time high of $147 in July. Goldman Sachs had announced that the $200 barrier could be hit any time and even the president of the OPEC (Organization of Petroleum Exporting Countries) had warned of oil reaching $200 a barrel.
 
Well, we are not hearing much of the peak oil theory any more. That is because crude oil is just around $103 now, rising recently after trading around $95 for a long time. But if you look at the Indian imported oil price, you would wonder whether we are re-living the worry of peak oil.
 

The rupee has been weak for a long time but has cascaded down in the last two months, pushing up oil prices in rupee terms to all-time highs. While the rupee has depreciated against the US dollar by over 12% since the beginning of May to an all-time low of Rs61.21, over the same period price of crude oil has moved up 29% from Rs4,936 per barrel (bbl) to Rs6,389/Bbl as on 8 July 2013. In dollar terms the price of crude oil is up by just 8% from $95.61 in May 2013 to $103.