Monday, May 16, 2011

Petrol prices rise again.....and will rise again. And again. Yet we continue to protest about nuclear power???

Every time the petrol prices rise, it causes much heartburn all around the country. PLUs (People like Us) get hurt by petrol price hikes and we start cribbing about where this country is headed. Frankly, as I look at it, petrol prices will keep rising.....till they initially cross Rs 100 a liter....and then Rs 150 and maybe even Rs 200 a liter.....and all this could happen in less than 10 years. The way oil consumption is growing, and reserves around the world dropping, there can be no alternative scenario. That’s why focusing on nuclear power is so important.

Petrol is just one of the refined products that come out of crude. The other major ones of course are diesel, kerosene and even cooking gas. Petrol prices are usually the ones to be raised the most and most frequently, because, petrol is very largely used in the personal transport sector....automobiles, two-wheelers etc. As such, petrol is used by the more affluent sections of the society. Why they should be subsidized by the government is a good question....they shouldn’t be! The impact of a petrol price hike on inflation is negligible given its relatively low linkage with other segments of the economy. The impact of a diesel price hike however would be much more profound. That’s why diesel prices are increased less often and in smaller jumps. Kerosene of course is a much more sensitive issue as it is used by the “aam aadmi” is hardly ever touched. Even cooking gas is spared by the government in an effort to reduce burden on the middle class. Unfortunately, none of these subsidies are viable in the long run. Since crude prices are expected to continue rising and we are expected to continue importing more than 75% of our crude oil requirements.

A crisis in one little part of the world can send the crude rates soaring. At $120 a barrel, oil has increased by more than 35% in the last few months (it has only recently and only temporarily come down to $105 or so). The political turmoil in the Middle East is the main reason for the spike in oil prices. Libya is only a small supplier of world crude really.....accounting for less than 10% of total oil production in the world; yet its crisis has sent shock waves around the world. In the business of oil, the balance between supply and demand is very fine and fragile. A little change here and there can impact prices to a very large extent.

If we cannot find a substitute for oil quickly, we will remain vulnerable to the developments around the world. Recently, Nomura (a large Japanese financial securities firm) suggested that oil could touch $220 a barrel. If that were to happen, the Indian government would have no option but to increase petrol prices to some Rs 100 a liter very soon; diesel nearly there......and also consider significant price increases to kerosene and cooking gas. This is no longer a distant worry.....its more near than we are thinking of right now.

But where can oil be substituted with other fuels? A large part of oil is used in thermal power plants. Since our power consumption is expected to increase by 5-6 times in the next 20 years (from 1.5 lac MW at present), oil consumption in the power sector will continue to soar. This is the one sector where nuclear fuels can easily substitute oil. In comparison, it’s relatively more difficult to switch away from oil in the transport sector. Nothing commercially feasible has been developed yet to facilitate this switch.

So, the only way out for India is to develop nuclear fuels. There are “relatively more” ample supplies of nuclear “raw materials” like Uranium and Thorium. India has a fair degree of expertise in nuclear technology. Besides, the doors of the world’s biggest technology companies have recently been opened for India. If now, Indian politics prevents India from exploiting this opportunity, then it will be a terrible tragedy for India.

So where is the politics involved?

Firstly, whenever land has to be taken for a nuclear power plant, the villagers have a problem. There are fears of a nuclear holocaust. The fact is that nuclear power plants are amongst the safest amongst all types of power plants, the recent Japanese disaster notwithstanding. The fear of nuclear plants is akin to the unfounded fear of air travel.....though in reality, air travel is far far safer than railways or roadways. People fear that nuclear radiation could harm them and lead to genetic deformations. Of course, these fears are fuelled also by political maneuverings of political parties who would not like to see the ruling government function smoothly. Villagers are provoked. Somewhere along the line, the fact that a country like France has almost 90% of its energy coming from nuclear power plants located right inside its own borders is forgotten. A combination of political evil and ignorance takes over and everything gets delayed.

Just look at the debate about Jaitapur. We have a plan to put up 10,000 MW of nuclear power reactors there. Now as long as all adequate precautions are taken.....and environmental concerns addressed.....why should anyone have a problem? But using environmental concerns as an excuse, the opposition parties are trying to stall the work. They are provoking people to start protests against the plant. NGOs – who I am sorry to say, don’t know their ass from their elbow – are also up in arms against the plant. The fact that a tough environmental ministry has given the clearance is of no use to them. Everyone knows that Jairam Ramesh is a tough nut.....why would you doubt it if his ministry gave the clearance? Now the project will be delayed for several the CM will have to manage the political issues and “convince” the villagers to “allow” the project to continue.

I am suggesting that we set an aggressive goal for nuclear power in the next 20 years. We must have more than 25% of our power generation from nuclear power. In the next 20 years, our power generation capacity would have gone up to about 8-9 lac MW....(from the present 1.5 lac MW). Let’s plan to generate 2-2.5 lac MW from nuclear power. Lets factor in environmental issues.....lets take care of safety worries. But let’s go get it!

Admittedly, nuclear power plants are more expensive than thermal and hydro power plants. But coal is also going to run out in the next 200 years and water resources are becoming increasingly difficult to harvest. Non-conventional sources of energy are still in a preliminary stage of development.....and are expensive as well. The additional advantage of nuclear power is that it is environmentally friendly. No emissions of “burnt” fuels.....hence much lesser levels of Carbon Monoxide, Carbon Dioxide, Sulphur stuff etc.

The real truth is that we really have no options to nuclear power. Costly or cheap....nuclear power it has to be. We simply have to reduce our oil consumption wherever possible. Starting with power plants is a good idea. Maybe one day....there will be nuclear powered cars also....and then maybe, we won’t have to worry about petrol price hikes!

(This post is based on a similar post I wrote on Feb 25th.....)

1 comment:

  1. if a nuclear power plant is planned to install on your neighbourhood, how will u react? think from ur heart..