Merger of oil PSUs will hurt consumers, harm India’s energy security

A single energy behemoth, created after the merger of oil PSUs, would have too much power over India's energy strategy, says report

ragini bhuyan
Updated22 Apr 2017
Merger of PSU oil companies in the pipeline.
Merger of PSU oil companies in the pipeline.

The government’s plan to merge India’s oil companies will harm consumers and energy security, according to a paper in the Economic and Political Weekly by Bhamy V. Shenoy, a consumer activist and former oil industry professional. The government wants to create an energy behemoth on the lines of Chevron and Rosneft, one that has more clout to negotiate on deals such as crude oil purchases. Shenoy argues that talk of benefits arising from economies of scale are overblown as the cost of discovering crude or production is not dependent on the size of the company but on technical expertise: a smaller company has a better chance of retaining talent than a large, bureaucratic organization. He also notes that India’s public sector companies are well capitalized. Moreover, a single oil giant would also hold undue power and influence over the country.

Also Read: Does India Need a Giant Integrated Oil Company?

Development of urban train systems does not uniformly increase real estate prices around the vicinity of new train lines, says a National Bureau of Economic Research (NBER) paper authored by Seungwoo Chin and co-authors from the University of Southern California. The paper takes the example of Line Number 9 of the subway in Seoul that connects the southern part of the city to the city’s richest district, Gangnam. The authors find that price appreciation differs across neighbourhoods. Prices rose around new train stations owing to reduced commute time to desirable locations and the opening of new establishments. But the rate of price rise fell in the destination areas of Gangnam, possibly because the new train service made the area accessible without residing there.

Also Read: Estimating the Gains from New Rail Transit Investment: A Machine learning Tree Approach

China’s official GDP numbers are often treated with skepticism: many believe that the figures are inflated. But according to an NBER paper authored by Hunter Clark and co-authors from the Federal Reserve Bank of New York, China’s economy did not slow in 2015, but grew at a rate faster than reported in official statistics. Instead of official statistics or the Li Keqiang index, the authors used observations from satellite-recorded night-time lights to estimate economic growth. They found that the variables used in the Li Keqiang index closely predicted growth of night-time lights in China, but the authors disagree with the equal weighing of the variables, and argue that bank loans should be weighted more than railroad freight. With the modified weights, the Keqiang index comes closest to predicting actual economic growth. The authors argue that the growth rates over 2004 to 2016 are not lesser than official statistics, but may be higher.

Also read: China’s GDP Growth may be Understated

Air pollution due to PM2.5 particles (particles smaller than 2.5 microns in diameter) was responsible for 7.6% of total global deaths in 2015, according to a study of the 2015 Global Burden of Disease (GBD) data by Aaron J. Cohen and co-authors, published in The Lancet. Deaths due to PM2.5 pollution exposure rose from 3.5 million in 1990 to 4.2 million in 2015. The study was based on GBD data which took into account the disease burden from 79 factors in 195 countries. The percentage of deaths due to PM2.5 decreased from 1990 to 2015 due to improvements in air quality in wealthy countries, even as absolute numbers of deaths from PM2.5 pollution rose in countries like India and China.

Also Read: Estimates and 25-year trends of the global burden of disease attributable to ambient air pollution: an analysis of data from the Global Burden of Diseases Study 2015

Income differences between European and Asian countries going back to as far as the 1500s are greater than previously estimated, according to an article by Peter Lindert from the University of California – Davis, published in VoxEU. Lindert arrived at the conclusion through a deeper analysis of historical data from six continents. With respect to India, his findings show that Mughal India around 1600 lagged much behind Japan and Northwest Europe in income levels. Previous research had posited that average incomes in the US caught up with those in the UK by the 1900s. However, Lindert’s research points out that average incomes in the US were much higher than in Britain or France by the late 17th century.

Also Read: European and Asian incomes in 1914: New take on the Great Divergence

Economics Digest runs weekly, and features interesting reads from the world of economics.

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