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Old 14th January 2015, 13:32   #4501
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Default Re: The Official Fuel Prices Thread

Just heard on Zee Business of the massive "Rs 1" cut being expected!

Prices have dropped by more than 50$ and in India prices have not even reduced by Rs15!

Surprising yet true!!!
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Old 14th January 2015, 15:34   #4502
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Default Re: The Official Fuel Prices Thread

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Originally Posted by JoseVijay View Post
Oil prices below $45 a barrel

While predicting oil prices is acknowledged as a mug's game, analysts are no longer sceptical of hitting the bottom at $30 or so a barrel. Such low prices may spread cheer among consumers, it could push countries dependent on oil revenues to the brink of economic collapse with unthinkable consequences for the global economy.
I don't get it , how can the reduction of oil prices affect countries dependent on oil revenues as long as they have enough production ? I only see them making less profits than before ,but definitely not a loss.
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Old 14th January 2015, 15:51   #4503
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Default Re: The Official Fuel Prices Thread

Read an article on AajTak Indiatoday that a cut of Rs. 2 per liter is expected for petrol on Jan 15th. However, OMCs are opposing this cut. Their argument is that they have bought oil at higher prices.
Why this logic is not applied at the time of hike?

If the OMCs do not relent, Govt. may move to increase the excise duty again. In both cases, the people are not going to gain anything; except in case of a price cut. What a deregulation! What a mockery!
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Old 14th January 2015, 17:00   #4504
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Default Re: The Official Fuel Prices Thread

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Originally Posted by stanjohn123 View Post
I don't get it , how can the reduction of oil prices affect countries dependent on oil revenues as long as they have enough production ? I only see them making less profits than before ,but definitely not a loss.
For many countries in the Middle east and even Russia a large part of their GDP is out of oil production. Imagine the impact when what was selling at $60-70 falls to $40-45 ! Countries like Oman almost entirely depend on oil exports only. Their entire export earnings shrink by 50%. They can then try to sell more oil but when demand is stagnating, prices will drop further ( which is what is happening now ). Of course, these countries would have accumulated surpluses but still their current year receipts will be hit hard. These countries are also heavily import dependent for their various goods and services. They will in turn decide to cut down on such spending which can affect countries that export goods and services to them.
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Old 14th January 2015, 17:46   #4505
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Default Re: The Official Fuel Prices Thread

CNBC TV18 just mentioned that the over recovery is 6.5 /Liter for petrol and 5.5/liter on diesel as per government sources...If the cut is INR 1 or 2, it would be a royal joke...There is easy space to cut prices by 7-8% tonight...
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Old 14th January 2015, 17:51   #4506
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Default Re: The Official Fuel Prices Thread

@saket77; I do not expect the Excise game this time, since Delhi polls are on. Yes, the OMCs have been crying about the inventory losses. But the Excise game is price cut matched by Excise increase, so it requires a price cut. Otherwise there will be a price increase, highly improbable in an election month. Many state govts may hike VAT to pocket the price cut!!
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Old 14th January 2015, 18:06   #4507
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Default Re: The Official Fuel Prices Thread

I also seriously had a hearty laugh when saw these reports of Rs 1 price cut. My point is simple. If you can't or don't want to deregulate fuel prices then why don't you just say so. The common man is not a fool and it is absolutely evident that you are still controlling prices.

On the other hand, deregulation means that the OMC companies are now free to decide the price of fuel. And these are all business houses which at the end of the want to make profits howsoever. Then why all this hue and cry for not reducing prices. Just like any other commodity they can decide when to increase or decrease prices. What am I missing here?
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Old 14th January 2015, 18:18   #4508
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Originally Posted by stanjohn123 View Post
I don't get it , how can the reduction of oil prices affect countries dependent on oil revenues as long as they have enough production ? I only see them making less profits than before ,but definitely not a loss.
The big oil producers happen to have massive social spending in their countries as well which is met by oil income. Venezuela (the country with biggest oil reserves and a major producer) needs oil at USD 160 or thereabouts to balance its budget!! Saudis need oil at about USD 100 to balance theirs. Russians are already in big trouble. Now if you increase production, there might not be a market for it. You cannot simply double the supply. That will crash prices further. And oil is actually mainly bought in futures market. You can buy oil for 2017 today! Sometime back the prices for mid-year 2017 were in 70 dollar range. It might be different now. I've not checked it.

As someone has already mentioned, the whole price fall could be a game to bring the Russians on their knees! Who knows!

Last edited by joslicx : 14th January 2015 at 18:19.
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Old 14th January 2015, 18:32   #4509
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Default Re: The Official Fuel Prices Thread

I hope prices are not cut. Why?

Well after reading a lot of economics in MBA, its seen people tend to try maximize their gain in short run and do not care about long term implications. "Well because in the long run we all would be dead" - John Maynard Keynes.

How long is this downturn gonna continue? Someday crude will rise. You all can enjoy some months of respite but crude will be back at $60. Middle east countries except Kingdom of Saudi Arabia, need crude at $80 to meet their budgeted social welfare plans.

With current scenario that's not gonna happen and there would be spending cuts impacting oil exporting nations.

Its good that crude is sliding but it will again rise and I can bet no economist knows when.

Oil PSU already have inventory of crude at $80. Its better prices are not cut
1. As losses will have to borne by consumers in term of taxes.
2. Also with price reduction there would be more demand and we would need more foreign currency to purchase oil.
3. Higher amount of traffic and pollution.

This is just a small phase of price correction in oil but its not gonna last long.
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Old 14th January 2015, 18:34   #4510
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Default Re: The Official Fuel Prices Thread

A good article about the oil prices in project syndicate, http://www.project-syndicate.org/com...letsky-2015-01

He essentially argues that the current fall in oil prices is not short term aberrance. Rather, oil prices, for a really long term, will remain in the $20-$50 price bracket. That appears to be a very logical argument/prediction and, if turns out to be accurate, is a really great news for us consumers.
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Old 15th January 2015, 09:44   #4511
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Default Re: The Official Fuel Prices Thread

After all the sturm und drang about inventory costs, it seems they have over-recoveries of ₹5.00-5.50 on Diesel and ₹6.50 on Petrol. With Delhi polls imminent, I am sure the prices will be cut. RBI dropping bank rate and the $ dipping below ₹62 after a long time will also help.
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Old 15th January 2015, 14:47   #4512
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Default Re: The Official Fuel Prices Thread

Another Wammy!

Extract from Business Std. though this looks somewhat positive for companies building roads where so many projects are stuck; but from end user POV ?

"
To boost spending on roads and highways, Finance Minister Arun Jaitley is likely to announce an increase of Rs 1-2/litre in the road cess on petrol and diesel. Currently, road cess on the two products is Rs 2/litre.

Ministry of Road Transport and Highways has proposed an increase and the finance ministry is likely to accept it as part of the Budget.

The road ministry has put forward two proposals before the Prime Minister's Office and the finance ministry.
• The first is to increase the road cess by Rs 1/litre and levy a two per cent surcharge on new vehicles
• The second seeks a Rs 2/litre increase in the cess

The second proposal is more feasible and is likely to come in the budget announcement, the first proposal might come under criticism from automakers and is unlikely to be taken up.

The government is committed to building 15,000 km of roads, as part of its ambitious surface infrastructure drive, which includes all-weather roads across villages and enhanced port connectivity.

Under Gadkari, the road ministry has been seeking more funds, as it plans to award road projects primarily through the EPC (engineering, procurement and construction) route, rather than the public-private partnership model. During the past few years, the interest of the private sector in the roads sector has fallen sharply, forcing the government to take the EPC route for awarding road projects.

The road cess comprises additional excise and customs duty on motor spirit (petrol) and diesel. According to 2014-15 Budget documents, in 2013-14, road cess receipts stood at Rs 19,632 crore. As such, a Rs 1-2/litre increase in the cess could increase the government's revenue by Rs 9,800-19,000 crore.

For 2014-15, proceeds from additional excise duty on petrol and diesel have been budgeted at Rs 21,400 crore.

Proceeds from the cess go to what is known as the Central Road Fund, used for development and maintenance of national highways, state roads, rural roads, construction and maintenance of bridges and level railway crossings.

A finance ministry official said a proposal to include a rise in road cess in the FY16 Budget was under discussion and was likely to be accepted, as the government needed funds to boost public spending on infrastructure projects.

In his mid-year economic analysis in December, Chief Economic Advisor Arvind Subramanian had made a case for increased public investment. Such investment should drive economic growth and act as a stimulus to more private investment, he had said.

On midnight of January 2, the government had raised regular excise duties on petrol and diesel for the third time in seven weeks, saying the proceeds from this would fund an "ambitious infrastructure programme".

India's annual consumption of diesel is 68.4 million tonnes (mt), while petrol consumption stands at 17.1 mt.
"

Last edited by rahulk2510 : 15th January 2015 at 15:13. Reason: Removed extra exclamation marks
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Old 15th January 2015, 15:10   #4513
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Originally Posted by rahulk2510 View Post
To boost spending on roads and highways...........
"
All this hogwash about improving roads, while we have to drive daily on what can at best be called a moonscape (due apologies to the moon), after paying nearly 1/6th of our car's sticker price in 'road' tax. Where did that money go? And now they want more?
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Old 15th January 2015, 17:03   #4514
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Default Re: The Official Fuel Prices Thread

And to think that diesel prices are supposed to have been deregulated!

The government is coming up with new schemes to fix the prices every other week. What are they going to do with all the excess recovery that they are now enjoying?
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Old 15th January 2015, 17:38   #4515
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Originally Posted by reverse_gear View Post
.....What are they going to do with all the excess recovery that they are now enjoying?
Don't worry, the govt. has enough unfunded populist schemes (announced during elections to get votes) to divert our money to. I'm not saying any of those schemes will ever get properly funded or actually benefit anyone except those supposed to deliver/supervise/manage them, but the common Joe taxpayer will continue to get ripped off in their name(s) as usual.

Last edited by Chetan_Rao : 15th January 2015 at 17:41.
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