Meaning

Deregulation is the process of removing or

reducing state regulations. It is therefore opposite
of regulation, which refers to the process of the
government regulating certain activities.
Opposition to deregulation may usually involve
apprehension regarding environmental pollution
and environmental quality standards (such as the
removal of regulations on hazardous materials),
financial uncertainty, and constraining monopolies

About OPEC
It is a permanent intergovernmental organization, currently
consisting of 12 oil producing and exporting countries,
spread across three continents America, Asia and Africa
Oil is the main marketable commodity and foreign
exchange earner. Thus, for these countries, oil is the vital
key to development economic, social and political. Their
oil revenues are used not only to expand their economic
and industrial base, but also to provide their people with
jobs, education, health care and a decent standard of living
OPEC was formed at a meeting held on September 14,
1960 in Baghdad, Iraq, by five Founder Members: Iran,
Iraq, Kuwait, Saudi Arabia and Venezuela. OPEC was
registered with the United Nations Secretariat on
November 6, 1962

Member countries

OPECs Objectives
To co-ordinate and unify the petroleum policies of the
Member Countries and to determine the best means for
safeguarding their individual and collective interests.
To seek ways and means of ensuring the stabilization
of prices in international oil markets, with a view to
eliminating harmful and unnecessary fluctuations.
To provide an efficient economic and regular supply of
petroleum to consuming nations and a fair return on
capital to those investing in the petroleum industry.

OPEC Statute & Membership

Any country with a substantial net
export of crude petroleum, which has
fundamentally similar interests to those
of Member Countries, may become a Full
Member of the Organization, if accepted
by a majority of three-fourths of Full
Members, including the concurring votes
of all Founder Members

The Statute further distinguishes between

three categories of membership:
Founder Members of the Organization are those
countries which were represented at OPEC's first
Conference, held in Baghdad, Iraq, in September
1960, and which signed the original agreement
establishing OPEC.
Full Members are the Founder Members, plus
those countries whose applications for Membership
have been accepted by the Conference.
Associate Members are the countries which do
not qualify for full membership, but which are
nevertheless admitted under such special
conditions as may be prescribed by the Conference.

 The OPEC Conference: The Conference generally meets

twice a year, in March and September, and in extraordinary
sessions whenever required. It operates on the principle of
unanimity and one Member, one vote.
The Heads of Delegation : The Heads of Delegation to
OPEC are the official representatives of each Member
Country to the OPEC Conference. They are normally the
Ministers of Oil, Mines and Energy of Member Countries.
Headquarters : Vienna, Austria.
Official language : English.
President : Rostam Ghasemi.
Secretary general : Abdallah el-Badri.
Currency : USD per barrel

Does OPEC Control The Oil Prices ?

Yes, OPEC's crude oil exports represent about60 per cent

of the crude oil traded internationally
The price of crude oil is set by movements on the three
major international petroleum exchanges:
The New York Mercantile Exchange
The International Petroleum Exchange in London
The Singapore International Monetary Exchange .

NOTE : OPEC is trying to price the OIL in

Euros rather then in Dollars- As the imports
from Europe for OPEC countries is
increasing and the US dollar is becoming
unstable in the market .

OPEC And India

In 2008 OPEC rejected Indias call for a price
band.
OPEC doesnt have uniform pricing policy.
India having high current account deficit as
it imports 70% of oil.
India-Iran payment issue.

Top 10 Oil Producing

Countries

Rank

Country

Production
(bbl/day)

Share of Worlds output

(Percentage)

10,730,000

12.65%

1.

Russia

2.

Saudi Arabia

9,570,000

11.28%

3.

United States

9,023,000

10.74%

4.

Iran

4,231,000

4.77%

5.

China

4,073,000

4.56%

6.

Canada

3,592,000

3.90%

7.

Iraq

3,400,000

3.75%

8.

United Arab Emirates

3,087,000

3.32%

9.

Mexico

2,934,000

3.56%

10.

Kuwait

2,682,000

2.96%

Top 10 Oil Consuming

Countries

Reasons For Fluctuation In Oil Prices

Production.
Natural causes.
Inventory.
Demand

Positive Impacts
Fiscal deficit.
PSUs.
Competitiveness.
Inflation.
Customer.
Social initiatives.

Negative Impacts
It is not just OIL PRICES that rise.
High OIL PRICES dont go away, except
in recession.
Salaries dont increase to offset rising
OIL PRICES.
spikes in OIL PRICES tend to be
associated with recessions.
High OIL PRICES dont recycle well
through the economy.

Housing prices are adversely affected by

high OIL PRICES.
Business profitability is adversely affected by
high OIL PRICES.
The impact of high OIL PRICES doesnt go
away.
Government finances are especially affected
by high OIL PRICES.
Higher OIL PRICES reflect a need to focus a
disproportionate share of investment and
resource use inside the oil sector. This makes
it increasingly difficult maintain growth
within the oil sector, and acts to reduce
growth rates outside the oil sector.

Case Study 1
BJP Govt. on
deregulatio
n of oil
prices.

The Narendra Modi government has

deregulated the diesel prices, tying it to
global prices of oil.
Mr Jaitley said. Deregulation means the
prices of diesel will move as per market
flow - just like petrol. It would also ease
the government's huge subsidy burden.
Recently, Raghuram Rajan, Governor of
the Reserve Bank of India, had advised
the Narendra Modi government to seize
the moment and deregulate diesel prices.

 The deregulation is a major reform move by the

Modi government. But it is not risk-free.
Deregulation is expected to bring private firms such
as Reliance Petroleum and Essar Oil to retail sales.
Originally, petrol and diesel prices were deregulated
in April 2002 when the NDA government led by Atal
Bihari Vajpayee was in power.

Mumbai Diesel Price = 55.47 Rs/Ltr

Historical Diesel price change date: Saturday, January 17,
2015.

Mumbai Diesel Price = 52.99 Rs/Ltr

Most Recent price change date: Wednesday, February 4, 2015

Case study 2

Bibliography