Abstract
The study quantifies the impact of crude oil price changes on the production, sales turnover and raw material cost of select industries in India where crude oil is a major direct or indirect raw material. The results show that there exists a relationship between crude oil price changes and production of chemicals, coke, and refined petroleum products, a significant impact is observed on the sales turnover of plastic, oil refinery, and automobiles industries. The raw material cost of fertilizers, food processing, and paints industries show a high correlation with crude oil. Energy is the undercurrent that drives economic activity in the world. Fortunes of countries have changed because of crude oil. Its importance to the global economy is unmatched, proven by the fact that oil is responsible for 2.5% of the world GDP. If provided a conducive business environment, companies around the world would like to tap opportunities a billion plus people in India present. India is heavily dependent on crude oil imports thus volatility in crude oil prices is a cause for concern.Int. J. Soc. Sci. Manage. Vol-3, issue-2: 87-92
Highlights
About 31 % of the world’s total energy demand are met by crude oil
Initiatives like the Make in India will further increase the demand for oil in India If India wants a sustainable future for its growing population, it is important to understand the impact crude oil price changes, to make suitable policy decisions concerning development of alternate sources of energy and raw materials, and minimise the use of crude oil to the extent possible, the first step is to understand its impact
Crude oil is a direct source of raw material for many industries: chemical industry uses naphtha, kerosene etc. whose prices are directly affected by changes in price of crude oil so, when crude oil prices go up production in these industries goes down (Table 4)
Summary
About 31 % of the world’s total energy demand are met by crude oil. India ranks among the top five oil-consuming countries in the world. About 30% of India's total energy consumption is met by oil. Despite the global financial crisis, India’s consumption continued to rise and it became the third-largest oil consuming country. Initiatives like the Make in India will further increase the demand for oil in India (www.tradingeconomics.com) If India wants a sustainable future for its growing population, it is important to understand the impact crude oil price changes, to make suitable policy decisions concerning development of alternate sources of energy and raw materials, and minimise the use of crude oil to the extent possible, the first step is to understand its impact
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