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Old 13th September 2012, 21:43   #826
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

For those predicting the end of the world due to rising food prices courtesy the diesel price hike please get your facts right before you make such fantastic statements.

A 10 wheeler carries 15 MT of cargo. Please get the consumption details of a trip between let us say Mumbai and Delhi - in litres. Multiply that by the increase in the rate and then divide by 15000. That should give you the increase in freight cost. Once you have that please do share with us what percentage of the retail price does that translate to.

This country is being held to ransom by the shopkeepers and middle men in the food trade. If anything these are the people who should be branded as traitors, a strong word I admit, but warranted never the less. They should be treated as President John F Kennedy dealt with big steel when they tried to arm twist the U.S. Our problem is we are a nation ruled by morally bankrupt & corrupt rulers.

Last edited by RS_DEL : 13th September 2012 at 21:44.
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Old 13th September 2012, 22:29   #827
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

Quote:
Originally Posted by RS_DEL View Post
For those predicting the end of the world due to rising food prices courtesy the diesel price hike please get your facts right before you make such fantastic statements.

A 10 wheeler carries 15 MT of cargo. Please get the consumption details of a trip between let us say Mumbai and Delhi - in litres. Multiply that by the increase in the rate and then divide by 15000. That should give you the increase in freight cost. Once you have that please do share with us what percentage of the retail price does that translate to.
I leave the math to whoever is interested, but that "10 wheeler" will need the same amount of diesel which now costs approx 12% more than what it used to, to transport the "15 MT of cargo" from "Mumbai and Delhi". Now I'm guessing unless the truck owner, the wholesaler, the middlemen, the retailer or whoever else, is magnanimous enough to absorb that rise in cost, the consumer will need to pay at least 12% more for whatever he is buying. Please correct me if I'm wrong.

Perhaps "rising food prices courtesy the diesel price hike" may not mean "the end of the world" to you or me, but it surely will pinch the less fortunate citizens of this country. You can, of course, deny the very existence of such a people.

Extremely sorry for the back to back posts. Peace!
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Old 13th September 2012, 22:32   #828
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

Quote:
Originally Posted by RS_DEL View Post
For those predicting the end of the world due to rising food prices courtesy the diesel price hike please get your facts right before you make such fantastic statements.

A 10 wheeler carries 15 MT of cargo. Please get the consumption details of a trip between let us say Mumbai and Delhi - in litres. Multiply that by the increase in the rate and then divide by 15000. That should give you the increase in freight cost. Once you have that please do share with us what percentage of the retail price does that translate to.

This country is being held to ransom by the shopkeepers and middle men in the food trade. If anything these are the people who should be branded as traitors, a strong word I admit, but warranted never the less. They should be treated as President John F Kennedy dealt with big steel when they tried to arm twist the U.S. Our problem is we are a nation ruled by morally bankrupt & corrupt rulers.
Interesting!! Let me make an attempt. Distance Delhi-Mumbai 1300km. Fuel consumption lets assume 2km/liter. So fuel used =650 liters/trip. Increase in cost = Rs5/liter. Total increase = Rs 3250/trip.
Goods carried per trip =15000kg. So increase per kg = Rs 0.21

So increase in fuel cost per trip per kg is 30 paise approx. If I buy 10kg of vegetables, I automatically pay Rs 3 more!!!!
I can understand it doesnt affect you or me, or anyone in this forum, but what about the common man? May be your car cleaner? Will he afford Rs3 more for his vegetables?
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Old 13th September 2012, 22:32   #829
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

Diesel prices have been revised upwards by Rs 5, while sparing petrol, a step in the right direction considering underrecovery of Rs 17 per litre on diesel. I wonder why the government can't raise Rs 1-2 every month instead of raising it at one go which attracts criticism and bloats the fiscal deficit.
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Old 13th September 2012, 22:36   #830
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

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Originally Posted by one-77 View Post
I leave the math to whoever is interested, but that "10 wheeler" will need the same amount of diesel which now costs approx 12% more than what it used to, to transport the "15 MT of cargo" from "Mumbai and Delhi". Now I'm guessing unless the truck owner, the wholesaler, the middlemen, the retailer or whoever else, is magnanimous enough to absorb that rise in cost, the consumer will need to pay at least 12% more for whatever he is buying. Please correct me if I'm wrong.
Considered in isolation, food prices should not rise by 12% because diesel is not the only cost for the truck owner. He also has to pay the driver, he has to pay back the loan to the bank, he has to account for wear and tear of the vehicle due to his trip. He has to pay for the electricity used in his office. He has to pay his office staff if any. None of these has increased by 12%. Again considered in isolation, all of this should remain the same. So his net increase in cost is far far less than 12%. Assuming fuel cost is 1/2 his total costs, his total cost increase should be 6%
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Old 13th September 2012, 22:36   #831
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

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Originally Posted by one-77 View Post
I leave the math to whoever is interested, but that "10 wheeler" will need the same amount of diesel which now costs

Extremely sorry for the back to back posts. Peace!
12% is a very large sum indeed!

But before we start talking percentages it is instructive and indeed educative , if the person referring to the percentages also sees the percentage of that cost element in the total cost structure.

To do that math ---> 12% increment in an expense which is shall we say 20 % of the total cost structure equates to 2.4% increment in the total cost structure.

That is why my suggestion ----> please do the math! It makes for a more informed debate.
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Old 13th September 2012, 22:39   #832
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Originally Posted by one-77
^ I agree that theoretically what you say is true. But more often than not, things don't work out the way they're laid out in the textbooks. My knowledge of economics is very limited. What I'm stating is only what I've been observing over the last few years.
I agree that diesel price hike leads to inflation but what I want to point out is the fact that even keeping the diesel price same will increase the deficit and hence increase infaltion.anyways,the scale of scams we have in India,all economic fundas go for a toss
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Old 13th September 2012, 22:40   #833
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

For an country run on honesty and transparency the effect of this hike will be negligible. But this is a country where an auto wallah running on LPG fleecing the passengers on the name of petrol hike.

Last edited by poloman : 13th September 2012 at 22:41.
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Old 13th September 2012, 22:41   #834
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Originally Posted by apachelongbow

Interesting!! Let me make an attempt. Distance Delhi-Mumbai 1300km. Fuel consumption lets assume 2km/liter. So fuel used =650 liters/trip. Increase in cost = Rs5/liter. Total increase = Rs 3250/trip.
Goods carried per trip =15000kg. So increase per kg = Rs 0.21

So increase in fuel cost per trip per kg is 30 paise approx. If I buy 10kg of vegetables, I automatically pay Rs 3 more!!!!
I can understand it doesnt affect you or me, or anyone in this forum, but what about the common man? May be your car cleaner? Will he afford Rs3 more for his vegetables?
Now you get it. Even onions cost over Rs. 20 per kg, so your price increase based on your calculation (assuming it has to travel 1300 km) is 1.5%. Let's be clear, even the rag picker does not notice a 30 p fluctuation in the price of onions.
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Old 13th September 2012, 22:48   #835
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Quote:
Originally Posted by one-77

I leave the math to whoever is interested, but that "10 wheeler" will need the same amount of diesel which now costs approx 12% more than what it used to, to transport the "15 MT of cargo" from "Mumbai and Delhi". Now I'm guessing unless the truck owner, the wholesaler, the middlemen, the retailer or whoever else, is magnanimous enough to absorb that rise in cost, the consumer will need to pay at least 12% more for whatever he is buying. Please correct me if I'm wrong.

Perhaps "rising food prices courtesy the diesel price hike" may not mean "the end of the world" to you or me, but it surely will pinch the less fortunate citizens of this country. You can, of course, deny the very existence of such a people.

Extremely sorry for the back to back posts. Peace!
Let's say an item costs Rs 1000 of which Rs100 is the transportation leaving 900 behind . Then there should be a 12% increase in the transportation cost and not the whole item so the transportation cost becomes Rs 112 and the new total with 900 should be Rs 1012. Which amounts to 1.2% inflation in this particular case. Could be higher or lower depending on the component of transportation cost in total cost but certainly will not be as high as 12% as other costs remain the same.
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Old 13th September 2012, 22:49   #836
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

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Originally Posted by Hayek View Post
Sorry, but that is completely wrong. Diesel has a negligible impact on food prices. And this is just a 10% hike, far less than general inflation or the depreciation of the INR since the last hike. Roll backs off course are still possible
Just wait and watch for the events to unfold in the days to come. You will be forced to withdraw the statement.

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Originally Posted by RS_DEL View Post
For those predicting the end of the world due to rising food prices courtesy the diesel price hike please get your facts right before you make such fantastic statements.
Can you please show me one company that religiously makes such a calculation before jacking up the prices?

Your calculations does make sense from a pure costing perspective. However the larger section of our people do not make such intense calculations before they jack up the prices. It is always made on an arbitrary basis. Sadly the legal system in our country does not make it viable to contest such a price hike.

Classic case in point: Share Auto Walas

If the Diesel cost per KM for a share auto before the price hike was Rs. 2 per kilometer. (Rs. 44 per liter Diesel/ 22 Kmpl). The share auto wala would charge 10 bucks per person for a 5 km trip.

And after the price hike of Rs. 5, his cost per Km would go up only by ~.30 paisa. However he would charge the passenger Rs. 5 extra for the trip. So the ten Rupee trip for a common man (passenger) will now cost him Rs. 15.

(Diesel) Price hike effect should always be seen in real terms and not just in money terms.

PS: The numbers used in the example are illustrative.

Last edited by Warwithwheels : 13th September 2012 at 22:52.
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Old 13th September 2012, 22:50   #837
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

Quote:
Originally Posted by apachelongbow View Post
Interesting!! Let me make an attempt. Distance Delhi-Mumbai 1300km. Fuel consumption lets assume 2km/liter. So fuel used =650 liters/trip. Increase in cost = Rs5/liter. Total increase = Rs 3250/trip.
Goods carried per trip =15000kg. So increase per kg = Rs 0.21

So increase in fuel cost per trip per kg is 30 paise approx. If I buy 10kg of vegetables, I automatically pay Rs 3 more!!!!
I can understand it doesnt affect you or me, or anyone in this forum, but what about the common man? May be your car cleaner? Will he afford Rs3 more for his vegetables?
So, this 10% is for whom? The middle man? lorry transport? Wholesale dealer? Retailers? etc etc.. and probably we are bound to all combine these "10%" and it reaches common man as a bomb.
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Old 14th September 2012, 00:36   #838
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

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Originally Posted by RS_DEL View Post
A 10 wheeler carries 15 MT of cargo. .......... Once you have that please do share with us what percentage of the retail price does that translate to.
Quote:
Originally Posted by Hayek View Post
Now you get it. ............even the rag picker does not notice a 30 p fluctuation in the price of onions.
Well, if it helps, I had a chat with a few truckers on my recent Leh ride. The guys I talked to told me that the FE of a 22-ton capacity trailer is 5kmpl when going empty, 3.5kmpl when going at full rated load of 22 ton. But these people, as a rule, always overload it to around 60-70 tonnes at which point the trailer returns about 2kmpl. When overloaded to over 100 tonnes it returns figures of ~1 kmpl. The trailer I saw up close had 2 fuel tanks, one of capacity 150 liters, and a supplementary (aftermarket) tank with a capacity of 300 liters. This is secondhand info of course, but I have heard it from the horse's mouth.

Taking this fact in consideration, could we redo the math? Since many others here are better than me at this particular calculation, could you please take over?
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Old 14th September 2012, 00:42   #839
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

Quote:
Originally Posted by Warwithwheels View Post
...
Can you please show me one company that religiously makes such a calculation before jacking up the prices?
...
+1. The absolute cost is not the only factor. All of us work on margins. So, if the base of base costs (such as diesel) increases, all margins (of the trucker for both up / down , of the various middlemen, of the manufacturer and even the retailer) would all play a major role. So, with just diesel, I would expect at least a 1 re increase for 30 p increase in transport cost for e.g.

Upon that, we all discussed about the usage of diesel by so many non-transport sectors, so the price of those commodities (say steel, mobile charges, etc) would also increase. Would have to wait and watch the impact unfold!
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Old 14th September 2012, 01:10   #840
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

with the amount of flak the government is going to face. they will be forced to roll back. My simple point is that if they are losing money, why don't they cut back on their taxes? oh wait, they can't.. how will they afford their luxuries?
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