Here is IOC Refinery Earnings update which claims surge in profit that represents 18-fold increase for 2Q 2010…..which doesn’t make a lot of sense because the ~21 Billion rupee net profit occurred only after the government compensated it by over 72 Billion rupee’s! The government owns 79% of IOC who represents over 1/3 of India refining capacity.
This is part of growing problem for US refineries since subsidized cheap import fuels are stealing capacity away from them and the strong demand for crude to China & India refineries is driving up crude prices globally which also destroy US refining margins.
The India Oil subsidy/price control is disguised as need for cheap cooking oil, kerosene & diesel for its domestic agriculture, transportation & residential sectors and to offset inflation cost. But because India & China have expanded based on exporting gasoline & diesel to Western Developed Countries – it becomes strategic advantage for all fuels, production transportation & other export cost that puts free trade like US & EU at tremendous disadvantage …… especially when coupled with the stupid lack of environmental requirement (due Kyoto largesse) for either production or expansion of refinery plants.
Obama made pointed rhetoric about India & China should not expect their Growth to come on the back of US imports and hopefully the Bill introduced in US House this year against China currency manipulation will gain traction before the whole industry and its jobs are lost to this unfair trade leverage.
This article claims that India did not subsidize refining sector earnings last year, but China has been doing it since 2005 …… claiming each year it was a one off situation that wouldn’t be ongoing. Its time for US refining to wake up and its time to start demanding some reaction from US lawmakers on actual Fair trade or Tariff provisions.