"Oil Price Deregulation" Proposal ?

Under a regulated set-up, the three oil companies were guaranteed returns on their investments.  Hence, there was no incentive for them to provide customers with better service.  However, under a deregulated environment, the industry players would have to compete aggressively against each other for customers, and consequently, returns on their investments.On the other hand, it should be noted that with the deregulation of the industry, the industry participants cannot resort to malpractices such as violating environmental laws or underfilling LPG cylinders.                                                                  There is a need to deregulate the industry because under a regulated environment, prices are not allowed to rise and fall with market levels.  This means that when prices went up, government had to shell out money to subsidize the difference between the old and the new price.  

But with the deregulation of the industry, government would be able to use the money for vital services and infrastructure, such as school buildings, bridges, roads, and hospitals.Where then will government get the money to subsidize prices if the industry is regulated?  It will be through an additional burden on all the taxpayers in the form of additional taxes.It should be noted further that the industry is not limited only to the retail aspect: gasoline stations.  There are also the commercial-industrial (e. g., transportation, factories, power plants); refining; trading; and bulk storage sectors of the market.

Petrolium minister Mr.Murlli Deora on his recent press conference expressed his view about Oil Price Dereuglation Proposal, Which he is going to present in front of government for approval. In his comment about the topic he argued apon two aspect one is pricing freedom will help the government to increase tax revenue and secondly it'll reduce burned of huge subsidiary bills from PSU which will ultimately help government to offset it's fiscal deficit.