Impact of oil crisis on petroleum product prices

Impact of oil crisis on petroleum product prices

Uprising and internal conflicts in the oil producing region coupled with crisis in Japan and demand for oil in China has increased by 15% over last year, putting a further strain on the already stretched crude production and supply.

Analysts have predicted that the average price of oil will increase from US$ 110 to US$ 130 or more per barrel this year. India is not insulated from this global scenario.

According to Avinash Kawadkar, General Manager Sales, Chemicals, TechNova the petroleum solvent situation is spiraling completely out of control. He points out that prices for petroleum products for the auto fuel industry, which are regularized by the Government, are currently hovering at Rs. 65 / Rs. 70 per liter. It is no surprise then that prices of decontrolled products such as petroleum hydrocarbon solvents, which are used as raw materials in most wash products, are escalating to staggering heights.

He adds, "On our part, we have followed our self-imposed guidelines, restricted price increase for petroleum solvent-based products, to exactly the increase in only the cost of raw materials used in our products."

"As a catalyst to encourage its customers to change over to ‘greener and safer’ options, TechNova has also held back the price increase on aliphatic washes," said Kawadkar.

"We have adopted a policy of staggered price revisions equivalent to direct raw material cost increases greater than 5%. In spite of the fact that raw material suppliers increase prices without notice we have been able to give advance notices to our customers," he concluded.

Restricted price increase may by far be the best option in the series of emergency preparedness for oil supply disruptions, there are other ways of coping with the situation. Kawadkar said: "We have recently introduced AmberWash WM, an aromatic-free product manufactured from imported solvent raw material, which has enabled us to offer price stability based on bulk international sourcing. Also, our R&D team is working on substitutes for petroleum solvents currently used in press washes."