It could be a close run year for demand and supply…

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Heading Out writes: The tragic loss of the Indian oil platform is likely to have more of an impact on that country than a similar loss here (which in a sense has occurred with the delayed production from the Thunder Horse platform damaged in the recent hurricane). India, as noted in an earlier post, only produces around 700,000 bd of oil, so that the loss of 100,000 bd plus is bound to have an impact.

The impact may be doubly felt since the replacement oil must be bought at world market prices, and the Indian oil companies subsidize the price of the refined product on the Indian market. The total subsidy cost last year was apparently $1.8 bn of which the companies paid a third. UPDATE to note Bloomberg has a story on this today.

The people in those countries affected are rather sensitive to tampering with government and corporate subsidies for fuel, which is an interesting contrast with the behavior of those in countries where the fuel is, instead, heavily taxed. One wonders how the changing availability of oil and the prices that governments can afford to pay will have on the ultimate stability of their governments.

More links and conversation after the jump at The Oil Drum.