Oil prices soaring-- fuel hike expected.

Oil is above $100 a barrel and this is the biggest threat to our economy in India. Already the government is talking about increasing the price of petrol by Rs 3-5 / liter.

This increase is going to cripple our economy. With increasing fuel prices will come increased inflation, increased interest rates and hence lower growth. Already you can see that companies are getting negatively hit with the impact of this. Today, the higher interest rates are not allowing companies to invest in increasing the supply side of the market.

Today commodity prices are starting to soar through the roof- oil, gold, silver ( at the highest level at 35$) and food prices are now starting to soar through the roof. A lot of this is being attributed to

1. The increased growth in the US and the emerging economies at the same time.
2. Increased tensions in the gulf area- presently the tension in Libya.

If the oil prices continue to go up at this rate, we will really need to find new ways of travel and saving on this precious fuel.

Companies are already looking to find ways to help reduce cost of transport- especially the IT and ITES companies. A lot of them are moving to the metro or local transport. Its important, because this part of the cost of delivery is now becoming larger and larger of the overall component.

The metros are now becoming more and more important. I have a few friends in Delhi who travel usually by metro to Noida. Its quite comfortable. But as more and more people move to such transport system, they would need to ensure that services do not deteriorate.

Here are some older posts on this

http://simplefinancialsense.blogspot.com/2010/07/using-cfls-to-save-on-energy-bills.html
http://simplefinancialsense.blogspot.com/2010/06/fuel-price-hike-part-2.html