Vikas Prakash
Great Lakes Institute of Management, india
Title: Oil Glut – Will India Shun Oil or Run on Oil?
Biography
Biography: Vikas Prakash
Abstract
Oil has continuously lost its share in the global energy basket since the first Oil Shock in 1973, when It commanded almost 50% share. Quest for alternative energy sources and energy efficient technologies accentuated with the Second Oil Shock. The share of oil had come down to 40% by 1980. During 80s and 90s it maintained its share around 40%. OECD oil demand fell. By 2009, Non-OECD demand, buoyed by China and India, surpassed the OECD demand. By 2014, share of oil had declined to near about 33 per cent. 2014 saw China slowing down with GDP growth rate of about 7%. Energy intensive industries like steel, iron and cement showed very sharp drop in growth. One may not see the Chinese energy demand rising significantly. With lower oil revenue available, even Saudi Arabia may find it difficult to finance its developmental push. This leaves India as a major hope for the oil glut global economy. Low price of crude oil has enabled the country to rein in inflation and current account deficit. Interest rates have been lowered, triggering expectations of spurt in economic activity. Initiatives like ‘Make in India’, ‘Start Up India Fund’ and ‘Jan Dhan Yojana’ are expected to boost the oil demand. Interestingly, emphasis on renewable energy (175 GW by 2022); Smart Cities; Record coal production (550 MT this year); LNG re-gasification terminals and environmental concerns may lead to curtailing of demand. Will India prove to be ‘Brutus’ in oil’s misery or become savior by raising demand?