As Russia and Saudi Arabia went on a face-off for the oil race, the excessive amount of pumping oil led to overproduction where countries are finding it hard to find space for storage. Since the United States pumped the most oil in 2019 with 13 million barrels a day, many US oil companies might even file for bankruptcy by the end of this year if the coronavirus pandemic still continues. Therefore, Russia has promised to slow down production in order to stabilize oil prices since they recently went below zero. This unnecessary fight has not only affected these three countries, but also the economy of most of the countries on the planet.
Since the sales of gasoline and diesel in India has been hampered by the coronavirus and the fight between Saudi Arabia and Russia, these gas prices has also affected all other sectors around the country. Specifically in the state of Tamil Nadu, petrol and diesel prices have not changed for the last 44 days. The novel coronavirus, which has impacted the lives of more than 3 million people worldwide along with taking the lives of more than 208,000 people, has wrecked the economy on a global level.
Although oil prices went below zero for the United States, states like Tamil Nadu have faced with other consequences where the prices have not changed a bit. To put the technicality of this issue in numbers, the petrol prices in Tamil Nadu on March 16 sold at Rs 72.28 a liter and diesel at Rs 65.71 a liter. Yesterday, April 28, those prices for both petrol and diesel were actually the same.
When petrol bunk owners asked the government regarding the unchanged prices, the federal government responded by saying that they need more funding at this critical time of the coronavirus so that they could spend them on hospitals and virus prevention. When the coronavirus began to affect the country on the a larger scale, state governments also began to press for more funding. This led the government to make the decision of stabilizing oil prices in order for them to focus on this health pandemic.
The government thought that if they reduced the prices of petrol and diesel, thereby reducing revenues, there will be a financial crisis in the coming future. Moreover, crude oil prices will be determined only when oil companies import oil from foreign countries. Therefore, the government completely paralyzed the sales. Now that the entire country is on the Janet Curfew, the government felt that there is no need for them to import more oil for some time. So, the price of gasoline and diesel are stagnant since they have been based on the same imported crude oil.
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