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Opinion National Interest PoV 50-Word Edit

ThePrint On Camera Videos In Pictures

Society & Culture Around Town Book Excerpts Vigyapanti The Dating Story

More Judiciary Education YourTurn Work With Us Campus Voice

How the Strait of Hormuz oil crisis is really going to cost India

The reason we’re not talking about the cost of an oil barrel yet isn’t that we paid for it; rather, someone else paid for it on our behalf and hasn’t sent us the bill yet.

There is a specific figure Indian households are being encouraged to disregard right now: $124.85. This amount represented the cost of a barrel of oil on 31 March. The reason we’re not talking about it yet isn’t that we paid for it; rather, someone else paid for it on our behalf and hasn’t sent us the bill yet. Over a period of four months, Indian households observed stable petrol and cylinder prices, despite a conflict occurring two thousand kilometres away that disrupted nearly half of the country’s energy supply. 

Currently, it is being cautiously communicated that the crisis has subsided. Crude oil prices have decreased. The Strait of Hormuz, we were told, had reopened. Exhale, except that even as I write this, Iran has declared the strait closed again, shipping traffic has stalled, and the United States insists it never closed at all. Nobody, including the ships currently sitting still in the Gulf, seems to agree on whether this crisis is actually over. The sense of relief that many felt, while understandable, may be somewhat premature. This is not due to the resurgence of danger, but rather because the economic implications of this crisis were not primarily about the war itself. 

Instead, they pertain to fiscal illusion—something every economist recognises but is less visible to the general public. It is the reassuring notion that a cost not immediately apparent has not actually been incurred. It is simply an economic version of a credit card; the obligation remains even if the statement has not yet been issued.

The chart everyone saw, and the bill few did

Examine the actual price of the Indian crude basket, which reflects the cost incurred by our refiners, rather........

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