If the opposition’s intentions are to buffer the common man from high petroleum prices, then innovative, better-targeted measures for alleviating their woes have to be figured out by them and the government, jointly. Giving an identical, universal subsidy to the users of 6-cylinder gas-guzzlers and a motorised cycle-rickshaw is surely not the way. Better ways exist.

In fact, a floor for crude prices seems to be the best option for any government, the world over. That way, alternative energy producers know they will have a stable floor to the price regime they are taking on. Else, resources will not flow into that sector at the pace they should. We have witnessed this already: venture capitalists globally were regretting their investments and bets on alternative energy start-ups when oil prices crashed from their mid-2008 highs of the $140s.

Global crude output has not exceeded approximately 86 million barrels per day since 2005, despite escalating prices. Globally we are probably at peak oil availability. The sooner we learn to make do with less energy, and the more we foster efforts to harness renewable sources of energy, the better-off

India will be. Free, if higher, petro-product prices will help us get there sooner than subsidised low ones. The process of getting there on our own terms, today, is less painful that being forced to get there by the world market via sudden, rapidly rising prices.

The writer analyses macroeconomic and energy risks for Hyderabad-based ValueLabs

express@expressindia.com