Tick-Tock, Tick-Tock, Tick-Tock... ; Despite the Recent Price Hikes in India, Oil Is a Ticking Time Bomb That Will Be Defused Only by a Sharp Drop in Demand and, in the Long Run, Alternative Sources of Energy. Meanwhile, Brace Up for the Coming Pain. Business Todays Rishi Joshi Reports.

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On June 4, US Federal Reserve Governor, Ben Bernanke, was at his alma mater, Harvard University, delivering a talk to graduating students. There's no danger of a 1970sstyle oil shock, the Harvard alumnus assured his listeners. Just two days later, oil prices reported their sharpest ever single-day gain of $11, coming within spitting distance of $150 a barrel, which some analysts think will be reached by July 4, America's Independence Day and when more cars than usual are out on the roads.

Don't blame Bernanke, though. At present, no one has any clue where oil prices are headed, except that they look set to move only in one direction north. $200 is what at least one analyst, Arjun Murti of Goldman Sachs, thinks a barrel of crude oil may cost in another six to 24 months. For India, which imports two-thirds of the oil it consumes every year, the implications are staggering. For now, the government has screwed up enough courage to permit only a partial increase in fuel prices the highest ever at one go, though and cut taxes on fuels and issued more bonds, worth Rs 96,000 crore, to stem the losses of oil marketing companies. In a televised address to the nation to explain the oil price hikes, an anxious Prime Minister Manmohan Singh did some plain talking: It must be appreciated that the price hike has been a bare minimum with the government and oil companies still shouldering the bulk of the burden.

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Tick-Tock, Tick-Tock, Tick-Tock... ; Despite the Recent Price Hikes in India, Oil Is a Ticking Time Bomb That Will Be Defused Only by a Sharp Drop in Demand and, in the Long Run, Alternative Sources of Energy. Meanwhile, Brace Up for the Coming Pain. Business Todays Rishi Joshi Reports.

As Rajiv Kumar, Director and CEO of think-tank ICRIER, points out: It's a brave step in an election year. But the reality is that even this is not enough to deal with the situation. It's an accurate assessment, given that the government even now subsidises fuel prices especially kerosene, LPG, diesel and petrol by a huge amount. The net under-recoveries after factoring in the revised prices and the duty cuts still work out to over Rs 2,00,000 crore.

State-owned oil marketing companies (OMCs) such as Indian Oil, Hindustan Petroleum and Bharat Petroleum are grateful for the small concession. Says Sarthak Behuria, ...

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