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Old 12th April 2017, 17:33   #1
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Default May 2017: Fuel prices to be revised on a daily basis in 5 cities

Petrol and diesel prices will be revised daily from May 1, 2017. This will be done as part of a pilot project in five cities across the country - Pondicherry, Vizag, Udaipur, Jamshedpur and Chandigarh. The same arrangement is expected to be expanded across the country in the distant future.

The pilot project will be launched by state-owned retailers like Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL). The price revisions will be based on the international crude oil price fluctuations and the INR-USD exchange rates. In the current arrangement, fuel prices are revised across the country once in every fortnight, on the 1st and 16th of each month.

Most of the advanced markets across the globe have already adopted daily revision for fuel prices. As a result, it is technically possible to do so in India as well. However, the authorities will start implementing this new system as a pilot project to understand the implications, before scaling it up across the nation.

Source: PTI
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Old 12th April 2017, 18:07   #2
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Default re: May 2017: Fuel prices to be revised on a daily basis in 5 cities

This is a very interesting move. This will also ensure that fuel cuts (and raises) are passed on almost immediately and not after the event has occurred. Not sure, how the calibration of the fuel pumps for the new prices will happen so frequently. Are they even equipped to manage this much fluctuation?

Last edited by GTO : 13th April 2017 at 10:09. Reason: Typos
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Old 12th April 2017, 18:10   #3
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I just want to ask a simple question.

Suppose I am a fuel retailer and bought diesel to resell at 60/litre.

Now, after a couple of hours, if the prices go down to say 55.50, would the retailer be reimbursed by the OMC's?
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Old 12th April 2017, 18:20   #4
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Default re: May 2017: Fuel prices to be revised on a daily basis in 5 cities

If the prices are going to change daily, how will the customers know if they are being charged correct rate or not at the fuel pump?

There should be some portal or something where the rates should be updated then on daily basis for each region/state.
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Old 12th April 2017, 18:34   #5
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Default re: May 2017: Fuel prices to be revised on a daily basis in 5 cities

Good move. Will ensure that price revisions are decoupled from trivial circumstances like upcoming elections etc. Will actually give more autonomy to the Big 3. Would also help bring in more competition from private players

Quote:
Originally Posted by car_crazy1400 View Post
I just want to ask a simple question.

Suppose I am a fuel retailer and bought diesel to resell at 60/litre.

Now, after a couple of hours, if the prices go down to say 55.50, would the retailer be reimbursed by the OMC's?
The main advantage of this move is to prevent this exact situation. The price changes would most probably be in Paise rather than Rupees. And mostly the revision would take place around midnight and would not be continuous throughout the day.
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Old 12th April 2017, 22:28   #6
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Default re: May 2017: Fuel prices to be revised on a daily basis in 5 cities

Good move by the government to make the oil prices dynamic as in Western world. This can trigger a healthy completion amongst various fuel pump dealers.

Apps like Gasbuddy (available in NA) can be really useful for people to track fuel prices in real time at various pumps and can take informed decisions. Plus app users can rate pump quality on service, cleanliness and other facilities.
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Old 12th April 2017, 22:46   #7
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Default re: May 2017: Fuel prices to be revised on a daily basis in 5 cities

Quote:
Originally Posted by car_crazy1400 View Post
I just want to ask a simple question.
would the retailer be reimbursed by the OMC's?
No, they don't do it today. And they probably wont in future too. The dealer makes a profit, whenever the price increases (just recall how all bunk say 'no stock' on the eve of imminent price hike!) so they cannot claim for the loss incurred when price goes down.

Quote:
Originally Posted by abhishek46 View Post
If the prices are going to change daily, how will the customers know if they are being charged correct rate or not at the fuel pump?

There should be some portal or something where the rates should be updated then on daily basis for each region/state.
How do we buy precious metals like Gold or Silver today?
I agree that the rate of consumption for fuel is far higher, but fuel stations cannot over-charge us - do remember that they have surprise visits for quality & quantity checks, and they would be penalized in case of misconduct.

Quote:
Originally Posted by tj123 View Post
Apps like Gasbuddy (available in NA) can be really useful for people to track fuel prices in real time at various pumps and can take informed decisions. Plus app users can rate pump quality on service, cleanliness and other facilities.
I guess this will become reality soon, like our zomato, tripadvisor, etc...
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Old 13th April 2017, 02:06   #8
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Default re: May 2017: Fuel prices to be revised on a daily basis in 5 cities

This daily fuel price revision would not have been possible in the yester years, without modern communication systems aided by internet.The infrastructure was not in place, earlier. Now that we have the technological means, it is going to be a reality.

Quoting the factors that affect fuel pricing from www.shell.in
Quote:
Frequently asked questions specifically about fuel prices in India.

Q : What is the retail price of fuel made up of?

A : The price of fuel at the retail station comprises the product cost, central government excise and taxes, State government taxes and operating costs and margin.

Q : Who controls pump prices In India?

A : Petrol & Diesel prices have been deregulated by Indian Government in June 2010 and Oct 2014, respectively

For Shell, the pricing decision is influenced by a number of factors including:

cost of bringing the fuel to the retail site (product and distribution costs)
cost of running the service station (e.g. salaries, rent, utilities)
Q : Why have fuel prices increased compared to previous years?

A : The cost of crude oil and refined product have risen and therefore fuel prices have increased. The cost of crude oil and refined product are influenced by a number of factors, such as increasing oil demand, limits in refining capacity, seasonal demand for product and extreme weather events that have affected refineries or fuel supplies.

Q : Why do fuel prices vary in different countries?

A : The price of fuel in different countries is affected by:

Cost of buying finished product in the country (country supplies usually cheaper than importing product)
Government excise and tax rates
Government subsidies for fuel
Currency fluctuations

Q : How does the US exchange rate affect fuel prices in my country?

A : Since the world's major crude oil market is generally traded in US dollars, any variation between a country's exchange rate and the US dollar will impact the cost of buying crude oil in that country.
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Old 13th April 2017, 07:39   #9
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Quote:
Originally Posted by tj123 View Post
Good move by the government to make the oil prices dynamic as in Western world. This can trigger a healthy completion amongst various fuel pump dealers.

Apps like Gasbuddy (available in NA) can be really useful for people to track fuel prices in real time at various pumps and can take informed decisions. Plus app users can rate pump quality on service, cleanliness and other facilities.

Not to sure that this will work in India. 99% of dealers are private and honestly we all know the methods they use to make a buck. This will be a new way for them to make some more. I foresee a large number of consumers haggling on the day's rate and will lead to delays and longer queues. Unless there is a system where the rate is published in the news paper or each of the oil companies update their apps accordingly on a timely basis, I think we might just get mugged.

This system might work better post GST as the tax rates across the country will be standard and will not lead to confusion.

Yes. If we can go through a demonitisation we can go thorough anything. Like I keep saying change is the only constant.
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Old 13th April 2017, 08:01   #10
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Default re: May 2017: Fuel prices to be revised on a daily basis in 5 cities

The fuel present in pumps was made from crude oil that was bought sometime ago, then what's the rationale behind changing it's price on a daily basis? I could have understood if the fuel we use on a given day is being made from crude oil bought on the same day. Here you buy crude oil for $ 50 on March 31st and gets refined and reaches us after 7-10 days, say April 10th and then suddenly the price shots up to $ 60 and voila you hike fuel prices! This will only help the oil companies pocket our hard earned money. Please don't compare this to gold and silver prices as nobody buys those for necessity or on a daily basis. We are talking about a commodity that runs the entire nation. Why not price it hourly and fleece the populace, price it high during day time and low during midnight?
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Old 13th April 2017, 08:57   #11
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Default re: May 2017: Fuel prices to be revised on a daily basis in 5 cities

Quote:
Originally Posted by The Rationalist View Post
Here you buy crude oil for $ 50 on March 31st and gets refined and reaches us after 7-10 days, say April 10th and then suddenly the price shots up to $ 60 and voila you hike fuel prices!
Here the refining process is the value addition that is being done to the raw material this is always at a cost and hence the price of the product increases. This is not sudden. There is a whole load of stuff to be done before crude oil can be converted into usable forms. The Reliance refinery was placed number one in manufacturing units by Discovery. So it is definitely worth the extra money.


Now you have a product that you want to sell and fix a price for the same. This price is lowered if there is low demand and increased if the demand is high. This is because the quantity of the product is limited. Now there are other factors like cartels coming into the picture which can skew the prices but that is a discussion for another day.
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Old 13th April 2017, 09:14   #12
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Default re: May 2017: Fuel prices to be revised on a daily basis in 5 cities

Quote:
Originally Posted by abhishek46 View Post
If the prices are going to change daily, how will the customers know if they are being charged correct rate or not at the fuel pump?

There should be some portal or something where the rates should be updated then on daily basis for each region/state.
I agree with you. I would suggest if they could have an app like weather for our mobiles which would display daily rates would benefit the masses in a big way and penetrate to all very easily.

Cheers,
Amey
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Old 13th April 2017, 16:45   #13
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Default Re: May 2017: Fuel prices to be revised on a daily basis in 5 cities

Quote:
Originally Posted by aravind.anand View Post
How do we buy precious metals like Gold or Silver today?
I agree that the rate of consumption for fuel is far higher, but fuel stations cannot over-charge us - do remember that they have surprise visits for quality & quantity checks, and they would be penalized in case of misconduct.
Well, the rates of gold & silver are widely available on every possible media, including all news channels, newspaper etc.
Whereas petrol rate are not available in any trustworthy website or media.

Secondly, we do not purchase gold on daily basis (unless in trading business). People buying it, check from various sources about ongoing rate and then proceed to buy it.
Who does these kind of thing before filling up for petrol?

Lastly, we very well know that a nexus between pump owners and checking agencies is highly likely to exist at many petrol pump outlets. There are many honest pumps, but many dishonest one also exist.

All i want to convey is that if the rate changes maximum of once in a month or twice in a month, people can know about it, and avoid getting fleeced.
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Old 13th April 2017, 17:58   #14
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Default Re: May 2017: Fuel prices to be revised on a daily basis in 5 cities

I doubt the feasibility of this pilot project. Dealers will hesitate to keep sufficent stock at the bunks. They will order only that much of fuel which can be sold during a day. The fuel bunks are provided gasoline from the nearest oil depots. Each of these depots covers a certain area. How are they going to bill a same product(take petrol) with 2 different rates(one rate for udaipur city pumps and another for out of city limit pumps)? This may result in black marketing of gasoline by out of city dealers as their cost price will fluctuate only twice in a month.
It would be better if the project is flagged off depot wise rather city wise.
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Old 8th June 2017, 18:30   #15
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Default Fuel prices to be revised daily from June 16, 2017

Fuel prices in the country will be revised daily, starting from June 16, 2017. Under the current system, petrol and diesel prices are revised every fortnight, after taking into account parameters like international crude oil prices and USD-INR exchange rates.

However, the oil companies were keen on revising prices daily. In order to do so, a pilot project was started on 1st of May this year. Under this pilot project, fuel prices were revised daily in five cities - Pondicherry, Visakhapatnam, Udaipur, Jamshedpur and Chandigarh. The oil companies now claim that the pilot project has been successful in the past month and they are thus expanding a similar system across the country.

State-owned oil companies like Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp are currently preparing their distribution network for the upcoming change in revision schedule. The Minister of State for Petroleum and Natural Gas, Mr. Dharmendra Pradhan, is said to have directed top executives of the aforementioned companies to extend the mechanism for daily price revisions across the country.

Source: ET
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