Historic Move From Government In Oil Price Deregulation

Today EGoM (Empowered Group of Ministers) headed by Mr. Pranab Minister agreed(Partially) for Kirit Parikh recommendations of oil price deregulations.

Today EGoM decided that, Petrol price will be fully decided by the market forces & other petroleum products like Diesel, Kerosene & LPG prices by partially depending on international oil price movement.

Today during market hours only this news came in & all oil marketing stocks closed very high even though market closed in negative.

According this deregulation,

1. Petrol will cost around Rs 3.5 more
2. Diesel price will be hiked by Rs. 2
3. Kerosene by Rs. 3
4. LPG by Rs. 35

This is one of best move as compared to longer time future of the country's economy, even though in short term it will leads to inflationary pressure as present inflation itself is very high as compared to RBI's comfort level. One more advantage is in shorter term, fiscal deficit of the country will be reduced due to less subsidizers to oil companies.

Now coming to stock market point of view, this move is good for longer term as ratings of the companies & country will be stronger as compared to past & present ones. And as I told earlier, almost all oil marketing companies closed with more 5% jump to their previous closes. But at same time stocks from Auto, Banks, Shipping & etc started falling as in the anticipation of oil price hike leads to

1. Less demand for auto sales
2. RBI's interest rate policy team may increase rates anytime sooner than later
3. Increase in the cost of shipping & transportation & etc.

Does Increasing Interest Rates Curb The Present Inflation

Some people might be feeling that, recently I have posted too much of Technical Analysis. But Candle Stick analysis is like that can’t stop in between.

Now coming to today's topic, "Does Increasing Interest Rates Curb The Inflation Rate", there will be many questions on headline of the topic itself! Like…

1. Is there inflation in India?
2. If NO, why retail prices(Sugar, Grains & Cereals) are so high?
3. If YES, then why WPI is not showing it? And what RBI & as well as Government are doing about it?
4. Does RBI is in position to increase the Interest rates in present condition of recession? & etc...

If you go by WPI headline inflation numbers India is in Deflation! Since June 2009 WPI numbers are in negative, due to reasons like "BASE EFFECT". But does really prices of various commodities like food grains, manufacturing items or for that matter oil are low or in other words is there any contraction in demand? Neither is true in India's case! Yes Food grains like cereals price doubled within this negative range of WPI, i.e. 2-3 months. And oil prices are also almost same whereas International Oil Price crashed from $147 to sub $70 levels. And manufacturing sector products are picking up their respective prices example recently Steel Companies increased their prices. So where is the Deflation? Only in numbers! As I wrote many times BASE EFFECT is causing this mismatch & that is expected to fade away from coming months October & November. But is this BASE EFFECT does not cause any more problems in future? No, it will come into picture in next year when WPI compares with this negative range. So obviously it will be very high & that too it will be accompanied with the recovery in the economy with elastic in demand. So is there any solution for this problem, yes there is. First they need to change components & their respective weightages in WPI series & it should be changing every now then depending upon change in economy, per capita income & etc. Second they need to adjust the Inflation numbers seasonally on which much work is going on in NIPEP & DEA. And I think there should be some coordination while comparing to previous years' numbers so that some type of comparative analysis is done by taking previous month as well as previous year.

So does RBI increase the interest rates to control the Inflation or Interest Rate policies are growth oriented? Because many sectors like Textile & other export oriented industries are badly hit due to this recession. Many experts believe that interest rates have hit the bottom. That means no more easy money? According RBI deputy governor Interest rates will be same till March 2010. And there are various school of thoughts are going on whether the recovery will be V shaped or W shaped or U shaped?

And even if RBI increases the interest rates also does it control the prices? I dont think so, because I believe this increase in price is due to mismatch in Demand-Supply & not because excessive money chasing few goods. In addition to that this year drought is spoiling game much more. And rest of the commodities depend upon the international price movements like oil, sugar & etc. So what is the solution for this situation? I think there is no shortcut in this matter. There should overall revolution in PDS [Public Distribution System] using some new technology like UID, should increase the efficiency of the agricultural productions, less dependency on rainwater & etc.

Business News Updates

Rupee hits new low as foreign funds pull out

The rupee hit a new low of 51.94 in intra-day trade against the US dollar, mainly owing to a growing risk aversion by foreign funds and rising dollar demand from importers, but recovered to close at 51.46, 30 paise lower than Friday’s close.

Dow drops below 7,000 for first time since 1997

Investors' despair about financial companies and the recession has brought the Dow Jones industrial average to another unwanted milestone: its first drop below 7,000 in more than 11 years. The market's slide Monday, which took the Dow down 300 points, was nowhere near the largest it has seen since last fall, but the tumble below 7,000 was nonetheless painful.

Deteriorating economy cuts off oil market rally


Oil prices plummeted more than 10 percent Monday with little to suggest energy demand will recover in the deteriorating global economy.

Benchmark crude for April delivery fell $4.61 to settle at $40.15 a barrel on the New York Mercantile Exchange. In London, the price for Brent crude fell nearly 9 percent, or $4.14, to settle at $42.21 on the ICE Futures exchange.

News Paper Articles

Today I read some very good articles in Financial Express & Mint.

In Financial Express, Ajay Shah has analyzed
-->The amount of capital flows to India in last 2 years
-->With respect to capital flow, how RBI has controlled the exchange rate
-->Impact of crude oil prices fall &
-->Opportunity for India in this crisis.

With respect to Ajay Shah's writings there is an editorial in the Financial Express.

And in Mint there is a very good article regarding
--> Top 50 Indian Companies (Considering the facts of MVA (Market Value Added), EVA(Economic Value Added), WACC (Weighted Average Cost of Capital), NOPAT, Cash Operating Taxes & etc.
--> Crash of Indian Stock Market to 2005 levels
--> Low interest rate policy of 2003 which helped in boosting the GDP
--> GDP percentages & Total growth in the GDP
--> Flow of money(M3)
--> Indian Companies' Fundamentals
--> There is interesting fact that the author is pointing out is only 15% of the companies out of 500, have created the value rather than size, where as rest of them concentrated for the size.
--> Managing trade offs between the P&L account and Balance sheet
--> Importance of sustained EVA growth & value creation to shareholders.

One Liners

Inflation came down to 8.9% from 8.98%

Crude oil slips below $50, presently trading around $48.7

Rupee hits another record low at 50.20/21

The Sensex and the Nifty closed below October 27, 2008 values, i.e. 8451 & 2553 respectively

Dow Jones closed 440 minus & ended with 7552

Oil Investments

Today Auxi sent me this article. I thought of sharing this article with you guys...

Oil Investments

Today daily here said, people in Gulf aren't affected by Global Financial Turmoil, in terms job cuts and losses amid the fear in Europe & US. The Gulf Countries are rich in Petrodollars. However, the fall in Oil Price creating a bit frustration among them. Below are the break-even oil prices for these Oil Rich Countries.

1) Saudi - $49
2) UAE - $23
3 Qatar - $24
4) Kuwait - $33

Any single penny more than the above petrodollar is explicitly goes as surplus to their budget. Imagine, the profit when a barrel was $147 in beginning of this year. Now the Gulf are struck with grief for falling oil price (US the #1 Oil Cosumer, consuming less). They OPEC has cut oil production 1.7 Billion barrel per day and further having a urgent meeting today for more production cut. They want create more demand and thus to make oil price to be between $70 to $90 per barrel.

British Prime Minister - Mr.Gordon Brown visited Qatar couple of weeks before for its investment in UK, Qatar is buying some of the assets in Bankrupted - Barclay's Bank. Our Indian Prime Minster was here for investment invitation.

Apart from all, Gulf is fishing in trouble water and adapting the policy "of someone loss in someone's profit". GCC sovereign funds are investing in real estates in the UK & US to buy at fallen price.

It is the right time for people with excess money to invest in Petrochemical industries and buy fallen shares on long term perspective and patiently wait to taste your investment fruit to ripe.

MoM Inflation

Guys I am posting about inflation again, please bear with me. While discussing in one of our class I told my friends that India is facing the imported inflation. That means majority of our inflation is imported in the form of oil as we import almost 70% of our oil requirements.

The best proof for that argument is this week’s inflation numbers, which reduced to 8.98% from 10.72%. Steepest fall of 1.72%, which is because of Naphtha (33% down) & Jet aviation fuel (18% down). And still petrol, diesel and gas rates are not reduced by the central governments. Center wants the state owned oil companies to recover the losses which amounts to almost Rs. 140000 crore. If those prices are reduced then again inflation will come down & may be within the RBI’s standard before its expectation. And looking at political angle, central government may want to cash in the cut in the prices just before the elections say in February or March. Till that time both the purpose will be solved like recover of loss & political gain. One more problem they are facing is great extent of rupee depreciation from its peak levels 38-39 to above 50 levels so for same amount of crude, India needs to pay nearly 10-12 $ more.

Now coming to today’s topic, I want to congratulate the central government for deciding to come up with month on month inflation numbers rather than existing year on year!

In this existing condition, actual price variation in the market may not be clearly visible as it is always compared with the base week of the previous year. Means even if in the market prices may be decreasing but if in previous year’s inflation increased from its last week then inflation numbers what we get now may not be decreasing in real term and vice versa. This is what I discussed with many of my friend’s earlier and I think once I posted also.

But now government is thinking about month on month inflation numbers. Here we will get almost accurate numbers in accord with the market price movements. Here inflation numbers which will be released will be compared with last month’s inflation numbers which will indicate the most recent trend in the inflation numbers. Of course in the process of changing from YoY to MoM they may face some problems like whether to take average of the whole month or that particular week in the previous month!!!

Now looking at the world economic condition, RBI needs to think one more round of interest rate cut in near future if not immediately. Since there is fear of DEFLATION and it will be there in all recession/depression times. Since almost all major economies like EUROJONE (first time since its formation), UK (Its interest is lower than the Euro first time since Euro formation), US (FED rate is 1%), GERMANY (Interest rate 3.19%) & ITALY (3.75% interest rate) are about to enter or already in recession. So to boost the domestic sentiments RBI needs to think of REPO RATE & CRR.

Updates…

So guys, as I posted yesterday about boosting our moral here is the some news which may be cheerful for us as management graduates and for country’s economy.

Inflation plunges to 8.98% as compared to 10.72%

Inflation for the week-ended November 1 has reached single-digit and come in at 8.98% compared with 10.72% the week earlier. The rate came down by 1.74% points from 10.72 per cent in the previous week.

The main reasons for inflation to come down so drastically are Naptha & Aviation fuel.

Internals ---> % week-on-week
Manufacturing WPI ---> Down 0.7
Fuel and power ---> Down 3.4
Naphtha ---> Down 33
Aviation turbine fuel price ---> Down 18


September IIP (Index Industrial Production) up @ 4.8% as compared to 1.3% of August

The September IIP, or index industrial production, has come in at 4.8% up from 1.3% during August and 6.98% year-on-year.

The manufacturing output is up at 4.8% compared to 7.45% year-on-year. The capital goods output is up at 18.8% against 20.9%; mining output is up at 5.7% against 4.9%.

The consumer durable output is up 13.1% compared to a fall of 7.3% year-on-year. The August industrial output is revised to 1.4% from 1.3%, on provisional basis

P Chidambaram, Finance Minister, said September IIP numbers are encouraging and growth in capital goods sector has been impressive and satisfactory. However, data collection must be improved and made more relevant, he added.

Oil plunges to 22-month low of $55 a barrel

Oil fell for a third straight day on Thursday to hit a 22-month low of $55 a barrel as there fear of recession in world economy.

US light crude for December delivery was down 81 cents at $55.35 a barrel by 0259 GMT, after having fallen earlier to $55.03 -- the lowest since Jan. 29, 2007. London Brent crude fell 41 cents to $51.96 in early Asian trade. "Oil prices continue to be pressured by fears that weaker international economic growth will depress oil consumption," said David Moore, an analyst at the Commonwealth Bank of Australia.

Oil fell 5% overnight, along with a big drop in US stock markets, after the US government shifted its position on how it planned to use its $700 billion bailout fund, which added uncertainty to financial markets and renewed fears of a protracted global recession.

Oil has lost about $91, or 62%, from its record high of above $147 struck in mid-July, on growing evidence that recent high energy prices and the financial crisis have dented energy demand in the United States and other industrialized nations.

Demand in the United States, the world's biggest consumer of oil, was expected to fall by more than 1 million barrels per day (bpd) for the first time since 1980 this year, the EIA said. The EIA also forecast world oil demand to rise by only just 100,000 bpd in 2008 and will be virtually flat in 2009, as it cut its 2009 oil price forecast to average around $63.50 a barrel.




Resources…

Moneycontrol.com
Rediffmail.com
TOI

Oil falls to 13-month low on economic weakness

Oil prices fell on Wednesday to their lowest in 13 months dragged down by expectations that economic weakness.

Today, it touched a low a session low of $74.6.

London Brent crude was $4.03 down at $70.50 a barrel.

Stock markets also fell sharply and the dollar weakened against the yen as global recession fears returned to center stage.

The Biggest Increase in Crude Oil Price

The price of crude oil climbed by $25 per barrel Monday, the largest jump ever over worries of a weakened dollar prompted by US government plans to buy failing mortgages from the troubled finance industry.

The price of oil for October delivery on the New York Mercantile Exchange jumped by $25 to $130 a barrel, before settling at $120.92 , or a $16.37 increase for the day's trading.

Oil prices spiked more than $25 a barrel on Monday the biggest one-day price jump ever as anxiety over the government's $700 billion bailout plan battered the dollar and touched off frenzied buying of safe-haven investments including crude.

Crude has gained about $40 in a dramatic four-day rally that has at least temporarily halted oil's steep two-month slide below $100. At this rate, crude is within striking distance of its all-time record of $147.27, reached in July.

The Nymex temporarily halted electronic crude oil trading after prices breached the $10 daily trading limit. Trading resumed seconds later after the daily limit was increased.

The huge rally was poised to shatter crude's previous one-day price jump of $10.75, set June 6.



Source

Timesofindia.com

Some more updates

Central banks step in to soothe markets

The Federal Reserve has stepped in to calm the markets by widening the collateral it accepts for advancing emergency loans to securities firms. A group of ten banks that includes JP Morgan Chase and Citigroup separately formed a USD 70 billion fund to ensure market liquidity.

The European Central Bank (ECB) and the Bank of England has also joined the Federal Reserve in taking action to soothe financial markets. The ECB said, “It awarded banks 30 billion euros or 43 billion dollars in a one-day money-market auction that was more than three times oversubscribed.”

China has cut interest rates for the first time in six years. The People's Bank of China has reduced the one-year lending rate to 7.20% from 7.47%.

George Bush, President of United States of America feels that the short-term financial market adjustments could be painful, reports CNBC-TV18. He said that the US government is working to reduce the impact of market turmoil on the economy. Bush added that he was confident of long-term flexibility and resilience of the economy.


Crude slips to $91.93/bbl; lowest in 7 months

Crude slipped to a seven-month low on demand concerns after Lehman's bankruptcy. It was the financial storm on Wall Street which overshadowed supply disruptions in the oil market.

In after hours access trading, crude is at USD 91.93 per barrel.


Meltdown in US finance system pummels stock market

Banking turmoil sends a shudder through Wall Street; Dow suffers biggest point drop since 2001

The upheaval in the American financial system sent shock waves through the stock market Monday, producing the worst day on Wall Street in seven years as investors digested the failure of one of its most venerable banks and wondered which domino would be next to fall.

The Dow Jones industrial average lost more than 500 points, more than 4 percent, its steepest point drop since the day the stock market reopened after the Sept. 11, 2001, attacks. About $700 billion evaporated from retirement plans, government pension funds and other investment portfolios.


Asian stock markets tumble after Wall Street falls on Lehman Brothers bankruptcy

The steep decline in U.S. stocks sent Asian stock markets tumbling sharply Tuesday as investors were rattled by concerns over an expanding global financial crisis.

Japan's benchmark Nikkei stock index fell 5.1 percent to 11,550, falling under than 12,000-point level for the first time since mid-March.

Hang Sang fell 1130 points, nearly 6%. South Korea's Kospi shed 6.2 percent, and Taiwan's benchmark was off 4.6 percent. The battering in Australia and New Zealand wasn't quite as severe, with key indices down 2.4 percent and 2.7 percent respectively.




Sources…

Bloomberg.com
Yahoofinance.com
Moneycontrol.com

Updates from world of business…

Finally relieved, as my end terms are over and did somewhat better than expected, except one or two subjects!!! In my last post, I posted about Rakesh Jhunjhunwala story. Today I am posting about how SENSEX has grown from 1991 from where our country’s growth started. But before that, very important updates from world of the business.

Lehman Brothers Holding Files for Biggest Bankruptcy

Lehman Brothers Holdings Inc., the fourth-largest U.S. investment bank, succumbed to the sub prime mortgage crisis it helped create in the biggest bankruptcy filing in history.

The 158-year-old firm, which survived railroad bankruptcies, the Great Depression in the 1930s and the collapse of Long-Term Capital Management a decade ago, filed a Chapter 11 petition with U.S. Bankruptcy Court in Manhattan yesterday. The collapse of Lehman, which listed more than $613 billion of debt, dwarfs WorldCom Inc.'s insolvency in 2002 and Drexel Burnham Lambert's failure in 1990.

Lehman was forced into bankruptcy after Barclays Plc and Bank of America Corp. abandoned takeover talks yesterday and the company lost 94 percent of its market value this year. Lehman shares dropped 81 percent in Frankfurt trading to 75 cents from their $3.65 close in New York on Friday.


Bank of America to buy Merrill for $29 a share

Bank of America Corp will acquire Merrill Lynch & Co Inc for $29 a share, for about $50 billion as the credit crisis claimed another of America's oldest financial companies. A deal that will give the bank the world's largest brokerage and a sizable investment bank, the Wall Street Journal reported on Sunday.

Bank of America will pay $29 a share for New York-based Merrill in stock, 70 percent more than the Sept. 12 closing price, the company said in a statement today. Merrill, battered by $52.2 billion in losses and write downs from sub prime-mortgage- contaminated securities, has plunged more than 80 percent from its peak of $97.53 at the start of last year.
The takeover ends 94 years of independence for Merrill and gives Charlotte, North Carolina-based Bank of America a sales force with 16,690 brokers who manage $1.6 trillion for customers.

Rupee falls to 46 per dollar; at two-yr low

The Indian rupee on Monday dipped to a two-year low of 46 against the US dollar following heavy demand from importers for the greenback.

The rupee fell by 25 paise to 46, a level last seen on September 29, 2006, against the US dollar in early trade.


Oil prices tumble below $93

Oil prices plunged below USD 93 a barrel on Monday, reaching the lowest levels since February, on the prospect of weaker demand for energy amid a worsening global financial crisis in the wake of Lehman Brothers' bankruptcy, analysts said.

Brent North Sea crude for delivery in October tumbled by more than USD four to USD 92.84 a barrel.

Market Story

It was a historic day today as global markets went into a tailspin following a US financial meltdown. Lehman Brothers filed for bankruptcy and Merrill Lynch was sold to Bank of America. The US financial turmoil had European and Indian markets reeling. Some of the Asian markets were closed today so the cuts were not deep there. The Indian market saw some recovery in the last hour of trade. Sensex shut shop at 13531, down 469 points and Nifty is at 4072, down 155 points from the previous close.


Sources…
Rediffmail.com
Bloomberg.com
TOI


Keep reading…
Keep Investing…

Some updates…

Share market

The Indian market showed resilience to close firm despite weak global cues. Sensex shut shop at 14401, up 157 points and Nifty at 4327, up 43 points from the previous close. CNX Midcap index was up 0.13% and BSE Smallcap index was down 0.16%. The market breadth was negative with advances at 558 against declines of 662 on the NSE.

It was a lackluster week for the Indian market. Experts feel a close above 4335 on Nifty would be positive and take the market higher with some choppiness next week (also F&O settlement week). The figures this week are: Sensex was down 2.3%, Nifty 2.5%. BSE Midcap index was down 2.8% and BSE Smallcap index down 2.6% over the week. BSE Bankex index was down 4.2%, BSE Realty index down 4.4% and BSE Oil&Gas index down 2.3%. BSE Healthcare index was up by 0.52%.

Oil prices fall over $6 on stronger dollar

Oil prices plunged more than $6 a barrel Friday, erasing gains from the previous day's big rally after the dollar strengthened and Russian troops began a long-awaited pullback in Georgia.

Light, sweet crude for October delivery fell $6.45 to $114.73 a barrel in afternoon trading on the New York Mercantile Exchange. On Thursday, worries about Russian hostilities helped push prices up $5.62 to $121.18, crude's highest settlement price in over two weeks.

Buffett sees economy weak until 2009

Warren Buffett said the economy is still in a recession and unlikely to improve before 2009 but that stocks appear better valued than a year ago. "You always find out who's been swimming naked when the tide goes out. We found out that Wall Street has been kind of a nudist beach," said Buffett.

He also said Federal Reserve Chairman Ben Bernanke has no "magic wand" to boost an economy facing weak growth prospects, mounting inflation and deteriorating credit. "In my judgment it won't be any better five months from now," he said.

Rupee up by 10 paise at 43.42/43 against dollar

Continuing its gains for the second day in a row the Indian rupee on Friday closed higher by 10 paise at 43.42/43 against greenback on alternate bouts of buying and selling amidst oil prices' climbing and recovery by US dollar.

Dealers said they were anticipating further intervention by the apex bank to contain the sustain fall in the rupee, which hit 17-month intra-trade low of 43.86 on August 20.

However, suspected intervention by the Reserve Bank of India (RBI) in last two days helped the local currency to recover some lost ground.

Sources…

Rediffmail.com

Yahoofinance.com

Timesofindia.com

Updates from world of business….

Oil sinks on stronger dollar, slips below $116

Oil prices resumed their descent Friday, dropping briefly below $116 a barrel as a huge jump in the U.S. dollar and expectations of slowing global demand offset supply concerns over a sabotaged pipeline in Turkey.

Market this week

It was a good week for the market. Despite weak global cues the Indian market posted gains. The market was easily able to digest the higher inflation number. Experts feel the market is taking a breather after a fast run up and may witness some choppiness going ahead. The figures this week look good. Sensex gained 3.3%, Nifty 2.5%. BSE Midcap index was up 4.5% and BSE Smallcap index added 2.8% over the week. BSE Bankex index was up 9.5%, BSE Auto index up 8.5% and BSE Realty index was up 5.8%.

Gold falls to six-month low at Rs 12,000

Gold lost some of its shine as an attractive investment option in the bullion market on Friday with prices falling by a sharp Rs 250 to Rs 12,000 per 10 gram as the metal melted in the global markets on speculation that dollar gains might spur sales.

With Friday's fall gold in tune with the weak global trends has taken a hit of Rs 750 in last four trading sessions.

India 2nd-largest wireless market in the world

Mobile telephony has grown rapidly in India, especially during the last three years, with India becoming the second-largest wireless market in the world, says a World Bank study. The number of wireless subscribers in the country has crossed 250 million, making India the second-largest wireless market in the world, says the study.

Currently, China is adding about 6-7 million new subscribers per month, India about 8-9 million and the US about 2-3 million.

Updates from world of business…

Inflation at 13-year high of 12.01%

Inflation broke through the psychological 12 per cent level, the highest in over thirteen years, as prices of pulses, spices, eggs, fish and meat among other things continued to rise.

Today’s Market

It was a mixed picture across the globe. The Indian market closed flat masking intra-day volatility on account of profit booking at higher levels. Sensex closed at 15117, up 43 points and Nifty at 4523, up 6 points from the previous close. Top Nifty gainers included Sterlite, Dr Reddy and Tata Motors while losers included BHEL, Bharti Airtel and Reliance Communications.

Oil gyrates on demand concerns, pipeline fire

Oil prices fluctuated Thursday, erasing an earlier rally as growing concerns about falling U.S. demand for energy clashed with supply threats from a fire at a key Turkish pipeline.

Light, sweet crude for September delivery rose 21 cents to $118.79 a barrel in afternoon trading on the New York Mercantile Exchange, but prices were alternating between positive and negative territory. Crude sank more than $6 over the previous three days, bringing prices $30 lower than its July high above $147 a barrel.

World's top 10 consumers of oil...

Now a days US blaming India & China for everything. It started with world food price rate increase. A world leader (Dont want to name) blamed developing countries like India & China. Then it again repeated for crude oil price hike also. Now they are blaming for collapse of Doha talks. (About Doha talks I will write some other time). Now here are the some statistics regarding oil consumption....

Scientists say that the world's oil reserves could run dry over the next 30 to 50 years, crippling the world's economy. Which means that new oil reserves will have to be found, or alternative sources of energy will have to be developed, or the consumption of oil will have to drastically reduced.

The globe uses up almost 82 million barrels of oil every day, or 30 billion barrels per year, and the consumption is constantly growing by the day.....

1. United States

The United States of America is the single largest consumer of oil.

It uses as much as 20.73 million barrels per day!

2. China

The world's most populous nation uses 6.534 million barrels per day.

3. Japan

Japan is the third largest consumer of oil.

The Asian nation consumes 5.578 million barrels per day.

4. Germany

Germany is the fourth biggest consumer of oil in the world.

It uses 2.650 million barrels per day.

5. Russia

Russia is the fifth largest consumer of oil.

It uses 2.500 million barrels per day.

6. India

India is the sixth largest consumer of oil.

It burns up 2.450 million barrels per day.

7. Canada

Canada is the world's seventh largest consumer of oil.

It uses 2.294 million barrels per day.

8. South Korea

South Korea is the world's eighth largest consumer of oil.

It uses up 2.149 million barrels of oil per day.

9. Brazil

Brazil is the ninth largest user of oil.

It guzzles 2.100 million barrels per day.

10. France

France is the world's tenth largest consumer of oil.

It devours 1.970 million barrels per day.

More important than these is California consumes more petrol than India!!!!!!!!!!!!

The state of California's own statistics show that, in 2006, the state consumed 20 billion gallons of diesel and petrol as transportation fuel, a more than 50 per cent increase over the past two decades. But even more interestingly, 20 billion gallons a year tops the transportation fuel usage of the entire nations of China or India! California alone uses more petrol and diesel for fuel that any other country in the world. Isn't it surprise for a state with 36 million people to consume more transportation fuel than a nation of 1 billion-India, and still point the blame elsewhere?

How oil prices are wrecking the economy

In India, the demand for crude oil is rising by 7 per cent, while imports are rising by over 9 per cent. So, okay, oil prices have doubled in just over a year. Here's why:

Speculative trading
Traders bet on future prices of oil through commodity exchanges. If there is a natural calamity, or if a country's president or the boss of a global oil company makes a statement which could be linked to oil, the traders at the exchanges bet on a higher price in the future.

The record high price of nearly $147 per barrel.

Geo-political tensions, leading to supply disruptions

Caused by war, terrorist attacks or military warfare in oil rich countries, which could affect oil supply. The US sanctions on Libya, Iran and the war in Iraq have all affected oil prices

Blame it on shining India...
...and China and West Asia, where rising demand (at around 8 per cent from around 7 per cent a couple of years ago) is creating inequities between supply and demand

Controlled production by OPEC

The cartel of the world's largest oil exporters called the Organization of Petroleum Exporting Countries, accounts for two-thirds of the world's oil reserves but only 40 per cent of world production. OPEC does not want the market to be oversupplied as it would bring down prices. High prices suit the oil producing countries

The dollar dunnit

That's right, as the dollar weakens and other currencies harden, crude oil prices, which are traded in dollar terms, move to compensate changes in dollar value.

In India, here's where we are placed...

· This century is being marketed as one of natural gas. Gas, found with oil, was previously burned. Governments and companies across the world are now tapping the huge gas resources to fuel their economies. Gas is less than half the price of oil

· India's languishing hope for a nuclear deal with the US could boost nuclear power generation

· Many companies, including India's Suzlon, are going big on wind energy. Suzlon is developing Asia's largest wind park at Dhule, Maharashtra

· Companies like Reliance are betting on solar power. Reliance is setting up a 10 Mw solar power plant in West Bengal. It is also planning to adopt a village in Maharashtra to be lit by power generated from the sun's energy

· Tata and Reliance want to convert coal into oil. The technology is still in the initial stages. India has one of the world's largest reserves of coal

· Exploit gas reserves from crystalline rocks on sea beds - called gas hydrates. The technology is still being developed. Other than India, tests have been conducted only by the US and Japan. The reserves of natural gas locked up in these rocks are believed to be multiple times larger than the world's total gas reserves

Here's why we in India should be worried

India guzzles...

· 3.01 million barrels per day of crude oil

· 2.58 million barrels of petroleum products

But produces only

· 700,000 barrels of crude oil per day (23 per cent of its consumption). Demand for crude oil is rising by 7 per cent, while imports are rising by over 9 per cent. With rising prices, the import bill is ballooning, leading to a strain on government finances

But will oil prices come down any time soon?

· Russian company Gazprom, which supplies a quarter of Europe's natural gas, predicts oil prices, currently already very steep at $135 per barrel ($76 per barrel in 2006-07), will be $250 per barrel in 2009

· Goldman Sachs has projected that oil prices could rise to $200 per barrel by the end of 2009

· In fact, Morgan Stanley sees oil prices at $150 per barrel in the next three weeks

· And closer home, the Oil and Natural Gas Corporation says three-digit oil prices are here to stay, so you might as well get used to emptying out your wallet at the gas station

If Goldman Sachs is proved right (oh-oh!):

It means the prognosis for us in India is...

· Unsubsidised petrol and diesel could cost over Rs 100 per litre in India

· Growth may slow to much lower than the current 8 per cent

· Inflation may rise to over 16 per cent

· All of India's oil companies may become sick if prices continue to be subsidised

· And the world economy may slide into recession

And some more interesting facts

· China, India, Russia and West Asia oil demand: 20.67 million barrels per day

· US oil demand: 20.38 million barrels per day

· China oil consumption: 7.89 million barrels per day

· 2.45 billion people in China and India used only half as much crude as 301 million people in the US

· In India, energy use is less than 10 per cent of America's on a per-capita basis
The International Energy Agency says.

· The world's energy needs would be well over 50 per cent higher in 2030 than today

· China and India would together account for 45 per cent of the increase in global primary energy demand

Drastic measures

Or you might call them innovations!

· India's southern railways is using cooking oil to power trains. The railways collect used oil from hotels and restaurants in Chennai and put it through a process called trans-esterification. The project is already a proven success

· Some companies like cement-maker ACC are looking to use expired consumer products like shampoo, soap and paint sludge in their furnaces. However, this may only replace a very small quantity of the company's fuel requirements