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The Game of Moans



Recently the prices of petrol and diesel has been in the news because of it reaching record highs in India. But this is pretty much in line with what I have been forecasting for the last couple of years. The price reduction last year due to the fall in prices of crude oil was actually an anomaly. It was more due to political reasons than any natural causes.

The underlying reason for the price fluctuation of crude oil is simply the fundamental mismatch of demand and supply. Considering that crude oil reserves are slowly but surely getting exhausted in most of the countries in the Middle East it's only a matter of time before the prices go upwards of ₹200 / litre!!

In fact, even today the prices of petrol and diesel are artificially suppressed and kept low. Sounds incredulous?!! But this is a fact when you consider the healthcare cost aspect of fossil fuel. Let me explain. Any person who burns fossil fuel ends up polluting the environment, which in turn results in health issues and the cost of healthcare thereof.

This cost is borne equally by everyone, irrespective of whether they are polluters or not. This is really unfair on people who contribute less to pollution (cyclists or pedestrians). So if the cost of healthcare due to pollution related ailments were to be loaded on to the cost of petrol and diesel, you would reckon the real cost to be much higher than what it actually is right now!!

So that brings me to the next point. The entire debate about the cost effectiveness of renewable energy. A lot of people, especially in cities like Mumbai, have been putting off investing in Renewable Energy on the grounds of:
1) The initial CapEx is high (no longer justified or even true)
2) The technology is not proven (Really?!! Even after 30+ years of existence?)
3) There are more urgent uses for my money. (ROI in solar is >24% CAGR)
4) We are waiting for costs to fall further, (Sorry folks. It's bottomed out.)
etc...

I couldn't resist bringing in the "The Game of Thrones" analogy here. All the above arguments are kind of like the Starks, Lannisters and Targaryens fighting with each other over the kingdoms of the South. But the real threat comes from the Night King of the north. If they keep fighting within themselves instead of focusing on the Night King they will be wiped out of existence.

The 'Night Kings' in the energy scenario are:
1) The extinguishing resources of fossil fuel
2) Climate change.

If we keep taking morchas over petrol and diesel prices instead of going towards renewable energy, we may succeed in bringing the prices down by ₹5 per litre right now, but we would definitely have failed in leaving behind a livable Earth for our children.


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