Fuel Hike– A solution at the pump?

Many people around the world are (finally!!) coming to terms with the fact that fuel price hikes are here for good. Personally, am quite happy with that and think it would encourage car owners to think twice about driving around recklessly, and maybe think more about car pooling. However, am a bit concerned about the “aam admi” (common man) who uses public transport (bus, local trains, etc) or two wheelers. A price increase of even a few Rupees is quite a lot in his monthly budget, also given the inflation that’s going around. The government, for fear of popular backlash has resorted to very small hikes, thus leaving the government owned oil companies reeling under extreme losses while taking a personal tab to the tune of 1,80,000 crores a year at present fuel prices (http://www.pmindia.nic.in/speech/content.asp?id=687). That’s a huge amount considering India is a developing country and that money could be diverted to the social sectors.

It’s easy to be angry with the government and be a punk (which I don’t think is cool anymore!), but to think realistically would be the best way to go forward. Now, what would be a solution for the government to not fear a popular backlash while reducing the burden on the government exchequer?

I think the ideal way to go about would be to pressure the oil-producing countries to pump out more oil, or maybe put more checks around certain financial practices (hedging, etc), or maybe actively invest in green-friendly public transportation. I don’t find any of this realistic, atleast in the short term or given the geo-political or economic setup that exists in the larger scheme of things. Now, that leaves the government with very few choices. Looking into the entire distribution network and the consumption of fuel makes me think that the best place to start would be the fuel station. I think the oil companies could be a bit more creative about this. What if they price fuel differently for different segments of automobile users, or say design a pricing system that impacts different consumers differently?

The fuel stations could have different pricing slabs for say under 5 litres, between 5 and 10 and over 10 litres for private vehicles. Considering two wheeler users do not use as much fuel as private car users and also account for the majority of them at the fuel station, they are not as impacted by sudden global price surges. More importantly, this doesn’t affect their monthly budget while it helps to effect a change in the mind of the private car user. On the flip side, the government could stay popular among the “aam admi”, the exchequer could save a chunk of the Rs. 1, 80,000 crore annual tab and we can move closer to a more responsible green society.

It is so in the world that all the problems created by the minority are shared by the majority, including pollution, use of water, wastage, price hikes, etc. Maybe its time to turn around this unfair and unspoken rule of the world, and I think this is where the government could help. I am not aware of public-private-partnership (3Ps) or any of those fancy terms, but I think NGOs and policy think-tanks should be facilitators between the government and the people and not enforcers, similar to how the media should be. They could help the government frame policies that are friendlier to the majority while making the minority accountable for their actions as “polluters”. I am not saying the majority does not pollute at all, but given a choice the right way, they are open to change unlike the adamant and mindless minority. A good example would be the movement from “pay-and-use toilets” to the successful “use-toilet-get-money” setup by SCOPE Trichy and the local public authorities (http://www.scopetrichy.com/).

I feel good every time I ride in a CNG-friendly vehicle, but am also aware of how things have gotten difficult for the bus drivers in the nation’s capital (http://www.thehindu.com/2007/01/09/stories/2007010914920400.htm). As a student of engineering, I think it’s an efficiency problem in the evolution of better CNG systems, and could be rectified in time. Cycling and walking are options for short distances, still J

The majority, as I see it, seems to share the burden from the excesses of the minority while, ironically, the excess itself is never shared. This could be extrapolated to global problems, country to country.