Petrol's not going to be cheap anymore!

After 7 long months of deliberations, the Central government raised the prices of petrol and diesel by 2.5 Rs./- and 2.0 Rs./- respectively. The whole country seems to have gone in to tribulations over that. Many political parties have come openly against the government while the people themselves are raising their voice against this move. The common sentiment seems to be that ' the price hike is a gross injustice and a heavy burden on the purse of the public'.
But it has to be realised that the price hike was necessary and imminent and any responsible government cold not have walked away from that decision. Sometimes good economics come directly in confrontation with popular politics and the former suffers. When prices were last hiked in november, the world crude oil prices were nearly 35$/barrel, but over the past 7 months it has jumped manyfold to close to 59$/barrel and how long can the Petroleum marketing companies suffer losses? The hike has to be shared to an extend by the consumer also. There has been an argument that the oil companies are the largest profit making companies in the country and thus they can take this eating up of their bottomline. But it has to be remembered that it is from this same profit that these oil companies make huge investments every year to increase the energy security of the country. Moreover, the dividend paid by the oil companies form a significant part of the non-tax revenue of the government.
Thus the price hike was an inevitable move and it is high time that the consumers realised that the age of cheap fuel is over. A strong supply constraint is eminent in the oil sector and that will only spiral the crude oil price to the 100$ mark as predicted by Goldman Sachs.