The Hindu Business Line : Oil sense

With reference to the editorial “Oil sense” (Business Line, June 24), it is obvious that unregulated global commodity speculators do not go by logic or long-term trade interests of a particular commodity while speculating in oil as well as other commodities traded globally.

They rely on their perceptions of the market and try to make maximum profits on their deals, notwithstanding that speculation hurts global economies.

The oil-consuming countries also play into the hands of this speculative lobby by protecting the customers with subsidised oil. This, however, does not allow the markets to react with reduced consumption by curtailing wasteful uses of petro products and by diverting their energy sources to alternative modes such as solar power, hydro, atomic energy, wind power, tidal power or bio-gas, bio-fuels, etc.

In such a scenario, the decisions of countries to increase the petro prices may not only reduce the intensity of demand for fossil fuels but also force the consumers to go in for alternative modes of energy.

Such a strategy alone can confront the commodity speculators and ensure that their calculations go wrong and a bear market sets in for oil prices.

P. E. Muthu Mumbai

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