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Old 15th September 2014, 12:23   #3856
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Default Re: The Official Fuel Prices Thread

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Originally Posted by hyper-VTEC View Post
Its 15th today and not a single mention on price changes. That's strange!
Not in the Indian 'price-decontrolled' Indian petroleum sector. This is the normal here.

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>> there should be atleast Rs 2 cut, i feel
then maybe with great hesitation and screeching noise, there will be 50p reduction.
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Old 15th September 2014, 12:25   #3857
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Default Re: The Official Fuel Prices Thread

There is talk/news about diesel price cut today. Hopefully it does happen.

http://profit.ndtv.com/news/commodit...mpaign=story-8
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Old 15th September 2014, 13:51   #3858
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Default Re: The Official Fuel Prices Thread

Diesel deregulation. They have roped in Rajan into the opera. So wait for the cabinet yhis evening. There is even talk of Brent going down to $85 levels.
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Old 15th September 2014, 15:05   #3859
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As the mid term elections in US are around Nov, expect oil prices to drop further. Historically, oil prices drop during US election time as OPEC doesn't want to be a talking point during their elections. The Saudis typically increase production during these times.
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Old 15th September 2014, 15:31   #3860
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Default Re: The Official Fuel Prices Thread

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Originally Posted by lurker View Post
Not in the Indian 'price-decontrolled' Indian petroleum sector. This is the normal here.



then maybe with great hesitation and screeching noise, there will be 50p reduction.
They are probably thinking, "Let's keep raising the price until we've equalized the taxes on the two fuels as well.''

And I would be in agreement with that logic. After all, why should diesel be taxed lower than petrol? Falling crude is an excellent opportunity to equalize everything. Price control isn't hard to bring back if things start to rise.
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Old 15th September 2014, 20:51   #3861
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Default Re: The Official Fuel Prices Thread

No changes coming this fortnight. No news till now, its almost 9PM.
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Old 15th September 2014, 20:58   #3862
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Default Re: The Official Fuel Prices Thread

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They are probably thinking
ok they will 'start thinking' whenever it is time to reduce prices. Good strategy.
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Old 15th September 2014, 21:08   #3863
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Default Re: The Official Fuel Prices Thread

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ok they will 'start thinking' whenever it is time to reduce prices. Good strategy.
Apart from breaking even on immediate sales, there is also the question of accumulated losses. Falling crude despite geopolitical tensions from Iran to Ukraine is a god send for the government and oil companies. The way I see it, prices will not fall at anywhere near the same pace at which they rose.
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Old 15th September 2014, 21:30   #3864
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Default Re: The Official Fuel Prices Thread

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there is also the question of accumulated losses
accumulated losses of what ?
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Old 15th September 2014, 21:39   #3865
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Default Re: The Official Fuel Prices Thread

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Originally Posted by blacksport View Post
Not everyone, true, but members of your tribe is too few.

I can't recall a period between 1992 and today where diesel and petrol were priced close to each other. The gap in the past was huge and only started narrowing in the last few years. Would like to know which era you are referring to.


So what makes the difference is the turbo, and not the engine. Once turbo-petrols catch up, there wouldn't be any reason why somebody should be looking at diesel engines anymore.



Since everybody is doing the math, here is my math on why buying a diesel does not make sense for an average buyer. Of course, I am not very good at math, so I am open to being corrected if I got it wrong.
Attachment 1282648.
Hi BHPians.

I have been following this thread and did some calculation, which is my perception to view this scenario.

There are two parts of this analysis. Initial Expenditure and running costs.

The first part is pretty clear where the initial expenditure is kept same by allowing the petrol owner to invest the left over amount.

Now the second part, the petrol owner spends more money on fuel fills that is much higher than the diesel fills over the period of 7 years. To make them even, the money saved by the diesel owner every month must be eligible for investment. The report presented below assumes the diesel owner puts the monthly savings into an SIP and gets return @8.5% PA.

Name:  DvsP.jpg
Views: 410
Size:  53.8 KB

Time required to recover 128904 without selling the car is 2.5 years. After that the diesel owner makes profit.
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Old 15th September 2014, 21:51   #3866
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Default Re: The Official Fuel Prices Thread

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Originally Posted by lurker View Post
accumulated losses of what ?
Accumulated losses from selling fuels below cost.
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Old 15th September 2014, 22:15   #3867
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Default Re: The Official Fuel Prices Thread

Thank you for raising this point. Now I am no expert on the subject but a cursory look at the annual reports of the oil refiners show all of them in black. The pricing for retail sale is arrived at by a mechanism called export price parity which basically ensures that these guys are never at an actual loss. Their cries of selling at a loss is basically a perceived loss. I am sure there are people here who understand this and can explain it better and in more detail.

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Accumulated losses from selling fuels below cost.
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Old 15th September 2014, 22:37   #3868
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Default Re: The Official Fuel Prices Thread

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Originally Posted by khoj View Post
Thank you for raising this point. Now I am no expert on the subject but a cursory look at the annual reports of the oil refiners show all of them in black. The pricing for retail sale is arrived at by a mechanism called export price parity which basically ensures that these guys are never at an actual loss. Their cries of selling at a loss is basically a perceived loss. I am sure there are people here who understand this and can explain it better and in more detail.
A few things, they are in the black because they were compensated to some extent by government oil bonds. So on paper you can book that revenue in the year they are given rather than when they mature. Without that, they'd be in the red.

The export parity price rationale is correct but that is used to set a benchmark for domestic prices. However, like all things government, it gets twisted and corrupted to suit the need of the hour. When crude goes through the roof, our oil companies foot the subsidy burden from upstream i.e. ONGC, Oil India, to downstream i.e. IOCL, BPCL, HPCL.

Now, if it was a notional loss why would the government bother compensating these companies with IOU bonds? And if there was money to be made, why would the private players i.e. Reliance and Essar, stay out of the fuel-retailing business?
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Old 16th September 2014, 09:26   #3869
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Default Re: The Official Fuel Prices Thread

BPCL Profit before tax: 4035 Cr (2012-13)
1884 Cr (2011-12)

Net Cash Flow from Operations: 5478 Cr (2013)
925 Cr (2012)

Somehow accumulated losses are leading to quadrupling in profits.
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Old 16th September 2014, 09:39   #3870
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Default Re: The Official Fuel Prices Thread

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Originally Posted by lurker View Post
BPCL Profit before tax: 4035 Cr (2012-13)
1884 Cr (2011-12)

Net Cash Flow from Operations: 5478 Cr (2013)
925 Cr (2012)

Somehow accumulated losses are leading to quadrupling in profits.
Profits are necessary to invest in refinery upgrades to Euro-5, capacity expansion, new refineries, pipelines, depots etc.

If there are no profits, there is no money available capital investment or expansion & business will die!

Its because of oil prices are controlled, the international oil players have not come into India to explore, invest. We need full decontrol of pricing, transparent & competitive oil markets so that competition ensures there is no cartelization & prices are kept rational.
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