In this latter context, the experience of the US in displacing steam power with electric power is relevant. Thomas Edison illuminated lower Manhattan in 1882. The US industry did not, however, convert to electric power until the mid 1930s. This gap of almost five decades before the benefits of Edison’s revolutionary innovation could be fully realised was because of the nature of the industrial structure. US factories were not geared to deploy electric motors. They had to be redesigned and in many cases relocated before their steam and water turbine-based power systems could be replaced by electric motors. The process was slow and capital intensive. The same problem will confront us.

Technology will not be the blocker. It will be the infrastructure. Our existing pipeline, terminal and network structure may well have to be totally overhauled before non-fossil fuel-based substitutes to gasoline and diesel can be bought to the consumer. The question the FM should ask is, to what extent will current policies slow the development of a non-fossil fuel future? What will be costs of prolonging our dependence on fossil fuels?

Keynes (or was it Churchill interpreting Keynes) reportedly remarked that governments will eventually take the sensible decision but only after they have exhausted all other options. I wonder whether our government will prove Keynes wrong. Certainly, given the twists and turns in petroleum product pricing, there is little to suggest that the government is closing in on the sensible option. But who knows?

The FM is among our most sensible politicians and he might well announce steps in his budget that facilitate the adoption of a mechanism wherein the burden of the current high price of oil is shared more equitably between the Central government (reduced excise taxes), the state government (reduced VAT), the consumers (a hike in prices) and the companies (a cap on their profitability). Were he to do that, it would revitalise the oil companies and the issues of environmental protection and energy security could be more effectively tackled.

... contd.