Random Conversation: Why is my petrol price rising?

As a product manager, I have always been curious about learning from others and I take every conversation as an opportunity to learn. One such conversation left me with a lot to ponder about. It was a casual conversation with an autorickshaw-driver, that made me feel that a commoner is open to listening to others and using opportunities to learn from others as well.

Click here if you prefer to listen rather than read.

What started as a casual conversation about Uber and why auto drivers think that it failed them went to different tangents including politics. Though this part of discussing politics makes my family shrug urging me to avoid it, I strongly believe that there is no taboo associated with discussing politics and we certainly should be doing so, as it affects our everyday lives. The concerns exhibited by drivers contributed to my earlier article about Uber. The topic then took a tangent when we were discussing ideas about how their problems could be solved and that’s when he mentioned the Government being a part of the problem and how they have handled various issues including the constant price rise of gas(petrol).

When I mentioned to him that the war in Ukraine is also one of the variables behind the rise of Petroleum prices, he was shocked. To him, it did not make any sense, he could not understand how a war happening in a different country affects the rates of petrol in India. I wanted him to assume that there are 100 taxis run by 5 different associations owning 20 each that supply taxis to bring employees to work. One association is banned by the committee of taxi owners for some malpractice. Now the total number of taxis that can run in the market is reduced to 80. But the total number of customers remains the same. Because of the demand for taxis, companies will want to bring their employees happy and bring them to work, so would engage in a price war. This pushes the cost for the companies up and the taxis will be given to those companies that bid a higher price.

Similarly, India is predominantly dependent on other countries for Oil and Gas with OPEC countries being the major contributor. Though, India was buying not more than 2% of its oil. Russia the 3rd largest producer was sanctioned by many countries like USA, and Canada for invading Ukraine. This caused the countries dependent on Russia for oil to look for alternate sources thus causing a price war for crude oil. This is a classic Supply Vs Demand issue. This indeed was an Ah-Ahh moment for the driver. Besides, this there is so also the factor of low crude oil production from OPEC nations contributing to this price rise. But that is a topic for another day.

Photo by Engin Akyurt on Pexels.com

He was genuinely shocked when I told him that in Canada and the USA in 2022, the price of petrol rise by more than 100% compared to the prices in 2021. The price of 1 Litre of petrol in Canada was 0.95 cents in some locations in 2021 and it was selling for $2+ in June 2022 in the same location. The situation in India is not as gloomy as it is projected always. As I alighted from his auto, he thanked me and wondered how much information is not being shared or discussed in mainstream media.

Unfortunately, that’s where the bias of the media comes into play and such critical information which will help a lot of people is left unattended by the media in Tamil Nadu. All the debate in the media was just blaming the government and not even one tried to explain the reality. I believe each and everyone should invest some time to educate others about some basic functioning of the world to help them make better decisions and not let be fooled by politicians/media houses that want to create a mass mentality in understanding issues seldom analyzing them. Even schools and colleges should have a mandatory course in basic economics which would help students understand the functioning of the real world.