Soaring Fuel Prices, Disappointing Individuals

Soaring Fuel Prices, Disappointing Individuals

Fuel prices have skyrocketed! We all know that and are concerned about it. There is also an ongoing debate on why fuel prices are increasing. Let’s get some perspective on the same.

Crux of the Matter

Let’s dive into the details by taking a look at the breakdown of the fuel price.

Reasons As Claimed By Minister
Union Petroleum and Natural gas Minister Dharmendra Pradhan remarked the rising fuel prices was due to:

  • Reduced Fuel Production
  • OPEC+ nations seeking more profits

Uncontrollable Factors

  • Brent Crude rate increased from $40 a barrel to $63.49 since the pandemic.
  • Saudi Arabia cut down its daily production by a million barrels to shoot oil prices
  • 85% of India’s total fuel consumption is imported.

The Twist

  • Experts say, the Govt promptly passes the base price hike to the retail customers.
  • However, when oil prices reduced during the pandemic, the benefit was not passed.
  • In April 2020, petrol stood at ₹69.59/litre, while the base price was ₹27.96/litre.

  • In economics, the Jevons paradox occurs when technological progress or government policy increases the efficiency with which a resource is used, but the rate of consumption of that resource rises due to increasing demand. However, governments and environmentalists generally assume that efficiency gains will lower resource consumption, ignoring the possibility of the paradox arising.
  • In conservation and energy economics, the rebound effect (or take-back effect) is the reduction in expected gains from new technologies that increase the efficiency of resource use, because of behavioural or other systemic responses. These responses usually tend to offset the beneficial effects of the new technology or other measures are taken. For instance, if a 5% improvement in vehicle fuel efficiency results in only a 2% drop in fuel use, there is a 60% rebound effect. The ‘missing’ 3% might have been consumed by driving faster or further than before.
  • An ecotax is a tax levied on activities that are considered to be harmful to the environment and are intended to promote environmentally friendly activities via economic incentives. Such a policy can complement or avert the need for regulatory approaches. Ecotaxes address the failure of free markets to consider environmental impacts.

The Cocktail Fuel Of Ethanol And Petrol

The Cocktail Fuel Of Ethanol And Petrol

The nation has achieved a blending level of 5.09% of the green fuel ethanol in petrol between December 1 2019 and June 22 in 2020. India has made a major target to achieve 10% blending of ethanol (E10) in the vehicle fuel, petrol by 2021. Let’s see the history behind it and the current statistics of its usage.

Crux of the Matter

Story Behind This Mixture
One of the most comprehensive air quality laws in the world, the US Clear Act of 1963, required vehicles to use oxygenated gasoline i.e minimum oxygen content of 2% by weight in petrol, to help the vehicle fuel burn more in combustion.

One of the chosen oxygenates was methyl tert-butyl ether, or MTBE, due to its low price and higher availability. However, its high concentration was felt in drinking water, which was then traced back to spilled gasoline and leaky underground containers. Thus, Ethanol was seen as a safer replacement.

The latter was more eco-friendly because when it was used to oxygenate the petrol mixture, it allowed the fuel to burn even more completely and produced cleaner emissions. It was basically beneficial in creating cleaner air quality, rather than using direct fossil fuels.

What Are The Current Statistics?
India has made a target to achieve a 10% blending of ethanol in vehicle fuel, petrol by 2021. E10, a blend of 10-percent ethanol and 90-percent gasoline/petrol, is used in modern-day road transportations.

We are progressing steadily to a greener lifestyle with fuels like this one

According to the Indian Sugar Mills Association, some states like UP, Haryana, Punjab, Uttarakhand, Bihar, and Karnataka blended closer to this goal i.e taking the count between 8.5% and 9.8%.

The Ones Taking The Lead
Despite a less production capacity, Punjab and Haryana are taking the lead in creating this biofuel because of the supplies it’s obtaining from UP. The Indian government is hoping to achieve 7.5-8% blending levels starting from December 2020.

Major credit goes to the increased water availability and acreage under sugarcane cultivation, as per reports by sugar mills and distilleries who committed to supply for the ethanol blending programme (EBP).

Ethanol Can Power Rockets?
Ethanol was earlier used as fuel in primitive bipropellant rocket i.e liquid propelled vehicles, in sync with an oxidizer like liquid oxygen. The German A-4 ballistic rocket, known as V-2 rocket of World War II, credited with the starting of space-age, used ethanol as the main constituent.

 Ethanol was mixed with 25% of water to reduce the combustion chamber temperature. The V-2’s design team helped the U.S. develop an ethanol-fueled Redstone rocket that launched the first U.S. satellite.

  • The name ethanol was coined as a result of a resolution that was adopted at the International Conference on Chemical Nomenclature that was held in April 1892 in Geneva, Switzerland. The term “alcohol” now refers to a wider class of substances in chemistry nomenclature, but in common parlance it remains the name of ethanol.
  • Biomass is plant or animal material used for energy production (electricity or heat), or in various industrial processes as raw substance for a range of products. Burning plant-derived biomass releases CO2, but it has still been classified as a renewable energy source in the EU and UN legal frameworks.
  • Tesla Giga Nevada (or Gigafactory 1) is a lithium-ion battery and electric vehicle subassembly factory near Reno, Nevada. The facility is owned and operated by Tesla, Inc. to supply the battery packs for its electric vehicles and stationary storage systems.