This refers to the editorial "Oil on troubled waters" (October 6). Whether one likes it or not, elevated oil prices had been for long indicating the surge in the global economy. Before the crisis of 2008, most nations, particularly the advanced economies, were doing very well and world trade was flourishing. Global trade indexed at 50 in 1990, improved to 100 in 2000 and shot up to 250 in 2008, before the crisis. The period from 2000 to 2010 was equally significant for crude oil, both for its availability and pricing. During this period, the epicentre of growth was also shifting and so was the pattern of energy consumption.
Looking at the recent pattern of economic growth of nations vis-a vis the price of oil, this must portend a stasis in world growth and trade. The drop in the price of crude oil is transient relief for nations like India, which is heavily dependent on oil imports. With its sizeable domestic demand, India can benefit from lower crude prices. Export-driven economies such as Brazil and China, in the absence of growth-led demand elsewhere, may not be as enthusiastic about the price dip. The next decade or two could see exploitation of ground oil through fracking, huge expansion in renewable energy and large-scale production of natural gas. That will be the time when crude oil prices will cease to matter seriously.
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Looking at the recent pattern of economic growth of nations vis-a vis the price of oil, this must portend a stasis in world growth and trade. The drop in the price of crude oil is transient relief for nations like India, which is heavily dependent on oil imports. With its sizeable domestic demand, India can benefit from lower crude prices. Export-driven economies such as Brazil and China, in the absence of growth-led demand elsewhere, may not be as enthusiastic about the price dip. The next decade or two could see exploitation of ground oil through fracking, huge expansion in renewable energy and large-scale production of natural gas. That will be the time when crude oil prices will cease to matter seriously.
R Narayanan Ghaziabad
Letters can be mailed, faxed or e-mailed to:
The Editor, Business Standard
Nehru House, 4 Bahadur Shah Zafar Marg
New Delhi 110 002
Fax: (011) 23720201
E-mail: letters@bsmail.in
All letters must have a postal address and telephone number