Managerial economics


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Managerial economics

  4. 4.  Scientists have recently created a new biofuel using plants that burns just as well as a petroleum-based fuel.  Fossil fuels were plants once, millions of years ago, and so it makes sense that both the fossil fuels we use today and oils produced by plants are chemically similar. Both are made up of chains of chemicals known as hydrocarbons.  Consequently, by manipulating plant oils, it is be possible to create a petroleum substitute.
  5. 5.  This means corn, sugar cane, grasses and other fast-growing plants or trees, like eucalyptus, can be used to make the propellant, replacing petroleum.  Due to the current situation of depletion petroleum and the increase in its prices, alternative source of fuel and energy is of utmost importance.
  7. 7.  Petroleum has played an important role in the social, economic, and political history of the world. Since the nineteenth century, we have been using petroleum as a source of energy production. We have encountered major energy crises in the past and today we face yet another crises due to it being a non-renewable source of energy.  The future of our country’s energy supply is uncertain, but we are sure the world will soon run out of petroleum and need other major sources of energy. We have dangerously relied on oil to play a major role in the past, present, and future of our social, economic, and political history.
  8. 8.  The current rate of consumption of fuel in the world, clearly points to the future where our world resources become so depleted that it costs more money to drill that deep into the ground and becomes more expensive to get out than they can sell it. The world will be out of oil unless strict measure are not taken right now and petroleum substitute used extensively.
  9. 9. INDIA  The country is the sixth largest consumer of oil in the world and the ninth largest crude oil importer.  The petroleum sector is of immense importance to the economy owing to its significant forward integration with many other sectors. India is committed to boosting its growth in the years to come and this progress would translate into the country’s energy needs growing many times.  The need of the hour, therefore, is to channelize all efforts on exploration of new blocks effectively as well as efficiently.
  10. 10.  The overall consumption of petroleum products increased 3.1 per cent y-o-y in April 2013, Petroleum Planning and Analysis Cell (PPAC) of the Ministry of Petroleum and Natural Gas data indicated.  PPAC projects a 5.5 per cent growth in petrol demand, which accounts for 45 per cent of the fuel consumption in India.  Moreover, Business Monitor International (BMI) forecasts that India will account for 12.4 per cent of Asia Pacific regional oil demand by 2015, while satisfying 11.2 per cent of the supply.
  12. 12.  Plant oil is a combustible fuel which can be used as a substitute to petroleum which runs the industrial growth of an economy.  Petroleum is primarily used as a source of fuel for automotive uses. Its increasing usage in the current growing world puts a lot of pressure on the reserves of the world which are limited in nature.  Thus, any step to find a new source of petroleum is a huge business opportunity for the current scenario (and a major potential in the future).  The invention of extracting it through plants leads to a new fuel by the name of ‘Plant Oil’. This invention can be mass produced to compete with the widely available petroleum but at a slightly higher price.
  13. 13.  The depleting reserves of petroleum and gasoline are restricted to only certain parts of the world. Whereas, through new research, the plant and bio- reserves can be expanded over as much area as is required to cope with the increasing demand.  Researchers have identified land around the globe available to produce grass crops for biofuels with minimal impact on agriculture or the environment.
  14. 14. Mapped Grass Bio fuel Production Areas.
  16. 16. PRODUCER’S POINT OF VIEW  Production of plant oil fuel to substitute petroleum consumption requires a huge amount of capital investment which can not be done or expected from a start up.  Big industrial plants are required to process the raw material for plant oil. Then there is the need of huge raw material production of plants which will require entering into contracts with vast amount of farmers and producers.  All these initial costs will add to the cost of the plant oil. Creating marketability for the fuel will also put pressure on the resources of the companies.
  17. 17.  But the future prospects tilting in favour of this plant oil are so profitable that the companies can not see through this.  Making it available through the normal outlets with other fuel sources will be an uphill task for the companies.  This plant oil will be sold to consumers at a slightly higher price also, creating another disadvantage to the consumers and producers together.
  18. 18. CONSUMER’S POINT OF VIEW  Consumer’s always look for the cheapest fuel to run their vehicles. Due to the increasing prices of petroleum, they will go for that fuel which costs the least and does not affect their wallets in a larger magnitude.  The environmental factor associated with plant oil is a big attraction point for the consumers, but these consumers are only few in number.  Most of the consumers would not care about how this plant oil is made. Rather they will look for how much this plant oil will cost them extra.  The availability of plant oil in the initial phases will also be a deterrent for the new consumers who will shape the future of this product.
  19. 19. BUSINESS PROSPECT  This product has a very healthy business prospect in all parts of the world, but especially in India as it is the largest developing country. The scope of new environmental products in the country is very wide and will be supported by all, especially the government.  The initial stages will be difficult and non-profitable, but continuing with this product will generate huge rewards in the future.  Higher cost per litre will be slightly more, but through awareness and good marketing, this could be made a desirable product among the consumers.
  20. 20. CONCLUSION  We are just getting started on the alternatives to petroleum products. Its going to take decades, but worrying about peaks and such seems to be a waste of human capital. If, or more likely when, more efficient fuel to energy conversion arrives at advantageous cost, the energy crises will be destined to be history.  This is a step to a safe future and a prosperous tomorrow.
  21. 21. Thank You! -Abhinav Garg (954)