From the Pages of History :
The Price Of Petroleum
This article was written by SAROJ BHATTACHARYA according to then party line . Published in ‘ New Age ’, November-1956 . We reproduce it for study .
Energy is the basis of development and those who measure the growth of an economy by the relationship that its power resources bear to its population are not very far wrong . Any study of economic development must consequently involve an analysis and assessment of energy resources .
Interest in India ’ s energy situation is growing but so far the emphasis has been on the traditional sources-coal and hydroelectric power . Partly because of lack of sophistication , partly because the commodity itself is imported and handled by foreign interests there has been inadequate attention to the vital and emerging contribution of oil . Energy Revolution The world pattern is à pointer . Over the thirty-five years , from 1920 to 1955 the quantity of energy effectively consumed in the world expanded some 200 per cent . This enormous advance measures the pace of what many term the second industrial revolution . Further analysis reveals the special character of this advance — at the beginning of our period coal was the predominant source of energy , being responsible for some five-sixths of the effective requirement .
In the short space of thirty-five years there has been a dramatic reversal — from five-sixths the contribution of coal has dropped to considerably less than half . There has been some movement in the contribution of hydro-electricity — from three per cent in 1920 to seven per cent in 1955 but the massive advance has been that of July - 2021 oil . The share of oil has leapt from one-fourth to over one-half and there has been a 700 per cent increase in the same thirty-five years in the consumption of petroleum products .
Qualitatively also there are new features . To take transport for an example , it is well known that oil is the base of mechanical transport moving on the highways of the world and across its skies but the recent trend is for oil to displace coal not only in marine transport but also on the railways . The day is not distant , therefore , when the world ’ s mechanical transport will be based very largely on oil .
The mechanisation of agriculture , to take another example , is entirely based on oil as a source of energy and the heavy products of modern refineries gradually replace coal not only in the great furnaces of the modern factory but in the kitchen and in homes where domestic heating is a necessity .
So on all counts , quantitative as well as qualitative it would not be an exaggeration to say that the industrial revolution based on coal gives way to the industrial revolution based on oil . It is only nuclear power that sets the frontier to this new revolution and current estimates place the day of nuclear energy some twenty years from the present .
It is clear , therefore , that not only for the Second Plan but for the three following , at least , oil is to be a very significant factor in India ’ s energy situation . The period covered is the decisive one of India ’ s journey from a colonial to a developed economy .
The importance of oil is crucial and the more so when we realise that though India ’ s known reserves of coal are very considerable ( 60,000 million tons ) their location is concentrated ( the main reserves are situated in the Bengal-Bihar coal region ), their quality is low in relation to the demand for high grade products and the problems of extraction , mechanical , economic and human , are formidable . Hydroelectricity suffers from the twin problems of awkward location and enormous capital cost both in generation and in transmission .
Clearly the understanding of India ’ s oil situation is a matter of key importance . In the short compass of a single article it is hardly possible to do more than to indicate just a few of the key magnitudes of this vast and complicated subject , and one ’ s task is made even more complex by the tight monopoly on information exercised by the few powerful groups that between them control the supply and distribution of the oil that lies in the nonsocialist world .
Oil Prices
It is remarkable for instance that even the United Nations Organisation have to acknowledge publicly ( See ECE Report on the price of oil in Western Europe ) that their information on oil prices is inadequate . Another remarkable feature is that there is no published record of the cost of production of crude or of the cost of the refining process .
It is not surprising , therefore , that the question of oil prices should remain a dark and baffling mystery . That it should be so is
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