Overview
Last week the Union Government raised retail petroleum prices after a four‑year pause. The hike was foreseen because crude oil prices remained high and public OMCs were facing large under‑recoveries. The move also follows the recent five state assembly elections and a Prime Minister’s call for austerity to protect FX and curb inflation.
Key Developments
- India’s SPR holds about 36.7‑39 million barrels, enough for roughly seven days of demand at 5.5 mbpd.
- Combined with commercial inventories, total oil stock covers more than 70 days, still below the 90‑day benchmark recommended by the IEA.
- The United States maintains ~714 million barrels (≈18 times India) and currently has about 400 million barrels, giving it ~20 days of consumption.
- China’s strategic reserve is around 900 million barrels, far larger than India’s.
- India’s LPG storage is 1.4 lakh tonnes, while daily consumption is 80,000 tonnes, meaning reserves cover just under two days.
- For LNG, India relies on regasification terminals with no underground storage, unlike the US and China.
Important Facts
India is the world’s third‑largest automobile market after the US and China, increasing fuel demand. The SPR’s seven‑day coverage translates to 5.5 mbpd × 7 ≈ 38 million barrels. The combined 70‑day stock is still short of the IEA’s 90‑day recommendation. The US and China have invested heavily in underground LNG storage, enhancing energy security.
Exam Relevance
Energy security is a recurring theme in GS 3: Economy. Understanding the gap between India’s reserves and global benchmarks helps answer questions on strategic autonomy, foreign exchange pressure, and inflation control. The data also links to GS 1: Geography (regional demand patterns) and GS 2: Polity (policy decisions on strategic stockpiles).
Way Forward
- Accelerate expansion of the SPR to achieve at least 90 days of coverage.
- Develop underground storage for LNG to reduce dependence on imported gas and safeguard fertilizer production.
- Increase LPG storage capacity to meet at least a week’s consumption.
- Adopt a multi‑pronged strategy of diversifying import sources, enhancing domestic refining, and negotiating long‑term contracts to cushion spot‑price volatility.