Oil - are we headed in the right direction

As I had predicted in one of my earlier blogs, it would probably be the end of Olympic games 2008 which would signal the southward journey of oil prices.  And that is what has happened. Few surprises, it pretty much to realistic levels as I write this.  The Government of India is mulling to cut Oil prices by Rs. 5/- again.  They are also planning to cut diesel prices (a high point in bringing down inflation).  LPG - this is the thorny part, heavy subsidies have to continue.

I had rather the government maintain petrol prices as they are, instead of cutting it by another few rupees.  Instead focus more on diesel prices, as this could bring down inflation significantly, the losses could be cushioned by maintaining the same prices on Petrol.  Regarding LPG, its high time the government started aggressively promoting natural gas to households and making use of some good old "gobar gas" in villages or any such alternatives, thereby reducing demand in LPG.  Agriculture, according to me, should not be sacrificed to accommodate growth of bio - fuels.  

The flip side to oil prices could see the prices moving northwards again, although I sincerely hope it does not happen immediately. These low price scenarios are one of the best times to buy futures and options in Oil prices, so that any event of a major spike could definitely cushion India's gargantuan needs.