THE HINDU Editorial Vocabulary - May 8, 2018 - Topic 2

Price freeze: on high fuel prices

The price of oil has been shooting up for weeks now, with Brent crude oil futures hitting their highest level in more than three years on Monday, at more than $75. But for two weeks now, the state-owned oil companies have kept petrol and diesel prices unchanged. Since April 24, the oil companies have abandoned the daily price revision. Since then, the prices of petrol and diesel in the national capital, for instance, are stuck at ₹74.63 and ₹65.93, respectively. 

This is a glaring freeze, given that since the Centre introduced the dynamic pricing mechanism in June last year allowing oil marketing companies (OMCs) to revise fuel prices daily, the retail prices of various domestic fuels had been on a steady uptrend owing to the steep rise in international crude oil prices. The price of Brent crude oil, it is worth noting, has rallied by more than 50% since June last year. Against this background, domestic fuel prices were raised to their highest level since late-2013 last month until the price freeze began on April 24. The new pricing mechanism also caused prices to show more volatility on a daily basis compared to the earlier regime when prices were revised periodically, mostly on a fortnightly basis. Further, the rise in domestic fuel prices in response to rising crude oil prices has been quite inelastic recently. Petrol and diesel prices rose by 1 to 2% in April while Brent crude rose by more than 8%. This comes as a pleasant surprise considering that domestic fuel prices, which while not falling to an equal extent when crude prices witness a sharp drop, generally keep pace with any rise in oil prices.

The retail price of petrol is a hot political subject and successive governments at the Centre are routinely held responsible for it. It is therefore speculated that the OMCs are under pressure from the government to withhold upward revisions in the days before Karnataka goes to the polls. While Union Minister Dharmendra Pradhan stated last month that the OMCs have not been instructed to refrain from raising prices, no reason for the freeze has been offered. The performance of OMC stocks in the last few weeks also suggests that the markets are not convinced. It bears repeating, in the wake of the upcoming State elections and the general election next year, that the Centre must resist the temptation to go back on its previous reforms to the fuel pricing policy. After all, it is now clear that the policy of offloading the burden of high fuel prices on consumers by transferring the burden on to the OMCs is unsustainable in the long run. The government should opt to ease the burden of fuel taxes. The best way to do this might be to bring domestic fuels under the purview of the goods and services tax. For now, there is enough room to bring down prices by reducing excise duties on oil.

Vocabulary

Unchanged: not changed; unaltered.

Example: The landscape has remained unchanged for a thousand years

Abandoned: having been deserted or cast off.

Example: An abandoned car

Synonyms: deserted, forsaken, cast aside/off, jilted, stranded, rejected

Glare: giving out or reflecting a strong or dazzling light.

Example: The glaring sun

Synonyms: dazzling, blinding, blazing, strong, bright, harsh

Mechanism: a system of parts working together in a machine; a piece of machinery.

Example: The gunner injured his arm in the turret mechanism

Synonyms: machine, piece of machinery, appliance, apparatus, device

Steady: firmly fixed, supported, or balanced; not shaking or moving.

Example: The lighter the camera, the harder it is to hold steady

Synonyms: stable, firm, fixed, secure, fast, safe, immovable, unshakable

Freeze: a period of frost or very cold weather.

Example: The big freeze surprised the weathermen

Volatility: liability to change rapidly and unpredictably, especially for the worse.

Example: The succession of new rulers contributed to the volatility of the situation

Regime: a system or planned way of doing things, especially one imposed from above.

Example: Detention centers with a very tough physical regime

Synonyms: system, arrangement, order, pattern, method, procedure

Responsible: having an obligation to do something, or having control over or care for someone, as part of one's job or role.

Example: The department responsible for education

Synonyms: in charge of, in control of, at the helm of, accountable for, liable for

Speculate: form a theory or conjecture about a subject without firm evidence.

Example: My colleagues speculate about my private life

Synonyms: conjecture, theorize, hypothesize, guess, surmise, think

Convince: cause someone to believe firmly in the truth of something.

Example: Robert's expression had obviously convinced her of his innocence

Synonyms: make certain, persuade, satisfy, assure, put/set someone's mind at rest

Resist: withstand the action or effect of.

Example: Antibodies help us to resist infection

Synonyms: withstand, be proof against, combat, weather, endure

Burden: a load, especially a heavy one.

Example: Laying my heavy burden in the safe hands of the luggage compartment I went to my seat and was given rest.

Synonyms: load, weight, cargo, freight