[vina]

Originally Posted by arup.misra

...



When the government subsidizes fuels, the entire economy bears the costs while the benefits often go to the undeserving. Thus it is a fallacy to think that subsidized fuel is cheap. A higher subsidy burden plays havoc with the government's finances. The government then responds by either levying more taxes or borrowing more. Higher government borrowings crowd out private-sector borrowings (the latter are unable to borrow as much as they would like to). They also exert upward pressure on interest rates, thereby making capital more expensive. Many projects (corporate capex plans as well as infrastructure projects) are then rendered unviable. When corporates don't expand capacity, all of us pay the price in terms of higher costs of manufactured goods. And poor infrastructure is only too evident at every turn in our daily lives for me to belabor its significance here.

This is not to say that subsidies should be withdrawn for everyone. It can be continued for the underprivileged, farmers and even for transporting commodities. But subsidizing diesel for luxury (read – cars) is simply a slow poison that will eventually affect all of us – whether we drive or not.


....

Couldn't have said it better myself. And I believe the govt. is aware of what you are writing.

I think the problem is that the pain of increasing the prices will be felt instantly while the pain of not increasing will be felt in the long run. So this is also a generational problem - our generation cheating the next generations who can not vote yet.

Another problem is that the middle class is getting most of the benefits of the diesel subsidy now - and once a subsidy becomes a middle class subsidy it is next to impossible to get rid of it. LPG is a case in point - hardly any of the poor families actually use it, but the whole subsidy is given out in their name.


This particular subsidy is a shameful wealth transfer from the poor to the middle class - everyone pays the same social costs while the middle class benefits the most.



Full disclosure: I'm not a communist. I'm middle class. And I bought a diesel car recently.

[samsan02]

Originally Posted by arup.misra

The second reason is the need to encourage conservation practices. Only when consumers feel the pinch of higher prices will they consume less oil and adopt conservation-related practices. High fuel prices will also provide a fillip to alternative fuels which will be the only sustainable form on energy given that we are very near peak-oil period.

Very rightly said, the problem with people being unhappy when the fuel prices going up is that they just look at their current cost of commuting going up. But at the same time they forget that 80% of crude is bought from the foreign market in India. And if Any Govt. gives subsidies it creates a burden on the oil companies and this burden is also shared by say ONGC & GAIL as well not only BPCL, IOCL, or HPCL. But what it does is it creates a fiscal deficit, i.e you postpone your borrowings to be paid some day by the future generations.

So simply put some day your kid or your grand kid will pay up in terms of taxes on many things, for the benefits we are enjoying today in the form of subsidy.

At the best the govt. should discourage the use of diesel cars for personal use, just because diesel is cheaper than petrol it shouldn't be treated as an abundant commodity rather its an essential commodity. Even mobile operators use diesel to run generators at subsidized prices, imagine so many towers using them all over India, who is paying for them today its the Govt. in terms of creating a fiscal deficit. The mobile company will never pay back those to govt ever.


Govt.'s best option is to deregulate both the fuels make them driven by international crude prices and please remove those lousy taxes. That way it will be still be affordable.

In todays's rates I still don't get this equation lets consider
1 gallon in US costs $4 (highest in any state i guess) i.e 4x45 = Rs.180
1 gallon = 3.78 Liters, so 1 liter cost 180/3.78 = Rs. 47.61

when both US & India buy the same crude from the Gulf nations.

[vina]

Originally Posted by samsan02

...

In todays's rates I still don't get this equation lets consider
1 gallon in US costs $4 (highest in any state i guess) i.e 4x45 = Rs.180
1 gallon = 3.78 Liters, so 1 liter cost 180/3.78 = Rs. 47.61

when both US & India buy the same crude from the Gulf nations.

Why US, why not compare it with EU or UK?

In UK the prices are in the neighborhood of GBP 1.35/ltr for both petrol and diesel (diesel is close to 1.4) - this is about Rs.100/ltr


In US oil companies get huge subsidies - believe it or not, and on top of that there is no tax whatsoever. This is not the situation anywhere else in the world.

India/China are trouble at the moment because both subsidise retail fuel consumption very heavily, and given their populations and rising fuel usage and also, in case of China, the extreme inefficiency of fuel usage (in per $ of GDP terms) they are both distorting the world oil market at least as much as Goldman Sachs is.

[RS_DEL]

Originally Posted by arup.misra

I have a slightly different opinion on the subject of petrol vs. diesel cars.

transporting commodities. But subsidizing diesel for luxury (read – cars) is simply a slow poison that will eventually affect all of us – whether we drive or not.

P.S. I also own a diesel hatch.

Disclaimer – The views expressed by me is entirely personal and I’m not intended to hurt sentiments of any user (s). If I’d so accidentally I apologize at the outset.

You are one of the minority whose comments have taken a rational and logical view of the matter.

As I have said again and again on this forum either we should have free market pricing of fuels and let the choice be made by individuals based on their needs/desires/ability to afford etc OR the subsidy benefit should NOT be allowed to those who are not deserving/in need of it.

However till we face a cataclysmic development, things will not change. There are so many vested interests rooting for subsidized diesel, that a decision based on merits is just NOT going to happen.

[sa_kiran]

We have to keep in mind that diesel is after all a dirty fuel. The price difference between petrol and diesel in India is highly artificial, not sure how long it will last.

I feel that this link gives more information about diesel as a fuel: Why clean diesel is a myth in India?

[Speed Pujari]

We also need to consider the rising demand of Diesel cars which eventually has shot up the demand of diesel. The question is given the rise in demand will the govt. be able to bridge the supply-chain gap. To do this the only way is to rework on the subsidy.

It is just that govt. is not taking action but it is the high time that something has to be done about it. A spike in the diesel price is hard hitting the poors since the subsidy is enjoyed by the people who do not deserve-to-be.

Similary reduction in demand of petrol is also inevitable and the petrol prices may at least remain stable for some time.

I would not be surprised if the prices of Petrol and diesel overlap.

So say after 2 years, Petrol at Rs. 73 a litre (Rs 10 loss) and Diesel at Rs. 71(Rs. 18 loss) due to demand-supply gap is not inevitable.

Originally Posted by RavenAvi

...
What thought process made this decision for me - "at least till my generation is around, petrol shouldn't be a problem, even if the prices go upto 140-150/ltr. I will be 60 years old in 2036, and retired from active service in that year. My career will be over, and that will bring an end to my car-driving days as well. Let the generation after me worry about choices in fuels. As long as I can afford it, let me stick to petrol, however tough the coming days will be."...

RavenAvi- You have captured my hard wired thought word by word. Though I own two Gas guzzlers I am mentally prepared to get a Reva after the life of my cars is over.

Originally Posted by deep_bang

well. I have seen several Logan cabs having done 2 to 3L kms and seriously driving nicely even after all that.
So, does it not seem like they probably run more than petrol engines as they are built to tolerate higher pressures?

Try to have a quick chat with the Logan cabbies about the maintenance expense, you'll get to know the reality. I will not be surprised if they say they are maintaining white elephant.

Also, they may tell you the reason why they are more keen on buying Indica marina these days.

[Aroy]

At the lower end - the Alto/Nano/Santro there is no competition from diesel, and this is the largest selling segment. This segment has a both high milage and low milage users, but the low milage users predominant. The high milage users are any way shifting to CNG.

Given the low capital cost and low fuel bills due to low usage, this segment will always be there, hence I do not think that petrol cars are on the decline. In fact in my analysis, this segment will keep expanding, so that its relative ratio in the total vehicle population will increase. The reasons are

. Migration from young two wheeler owners, once they start a family and/or increase their disposable income.

. Second car, used primarily for single/dual occupant short trips - visiting neighbours, markets etc. Most of the trips less than 2km each way. Monthly usage less than 400km.

. Retired persons who want a simple small car for personal errands. This segment overlaps with the one above, the only difference is that here this is the only vehicle, rather than a second or third one. As life expectancy is increasing, this segment will be a sizable one in future (as in e.g. Europe, US and Japan)

. Persons driving in the Northern Himalayas, where there is a lot of snow, but the roads are decent. Petrol cars are less of a problem in cold climate and are preferred to diesel. This segment again will be migrating from Sedans/SUV as the lighter, narrower, short wheel base vehicle can traverse small twisted roads much better, and one or two occupants ensures excellent power-to-weight ratio.

[oxyzen]

In the lower segment (3-6)L, petrol will dominate. For someone who can only afford a car within a 5L bracket, the initial 1L price difference is a lot. But someone who is paying 10L for a petrol will not mind spending 1L more for a diesel. He sees it as an investment opportunity.

The other group with typical Indian mentality: They worry too much about running cost. It hurts every time they visit a petrol station. They are okey with spending a 100K beforehand without doing any further calculations.

And finally the torquey diesel motors is the biggest factor which lures customer to shift to diesel.

[pgsagar]

Yes, diesel rules. But the only problem is diesel car owners are a little careless about the frequency and length of their trips. I have a Lancer D which is so frugal that I always felt I am running it for free. That is where my carelessness comes in. I make 5 trips for 5 tasks. Keep the engine ( for aircon ) running for long durations while waiting at railway station/airport/shopping malls. Drive out of town more often even when it is not exactly warranted. On the other hand, a friend who has Alto plans his trips. Avoids traffic snarl-ups, clubs 3/4 tasks, uses scooter for 1/2 km ride, and borrows my car for out-of-town trips ( what are friends for,huh? ). Now the net result is I run up a bigger fuel bill than he does.

That is not all. By logging higher miles, I put more load on brakes/suspension which will come up for replacement faster than his Alto. Then there is additional risk of small fender-bender accidents which are more likely to happen if you drive more often. Like, 4 days back an auto ran into my Lancer's front bumper and nearly dislodged it. Any harder impact would have meant new bumper. Now that is cost, too.

So, I think it doesn't matter whether we use petrol or diesel. We all pretty much run up the same bills one way or the other. Money saved on fuel front may go into accessories or accident/break-down repairs or high mileage fuel bills and of course the initial high price of diesel. So, go pick whichever you fancy. We are all going to eventually spend same on motoring one way or the other.

[fast&furious]

Originally Posted by supremeBaleno

As long as petrol does not die (is available to fuel the petrol cars we have), I am indifferent to petrol-cars dying.

There is money and then there is the pleasure of driving. For the former, get yourself 1/2/3 cyl sluggish diesel cars and keep puttering around town on subsidised diesel. I am happy driving petrol cars that makes one feel alive, even if petrol costs 45% more. Case in point being a colleague's new Punto-90hp that I drove yesterday (fair comparo to my Baleno's 91bhp) - at 2K rpm, it feels like I am physically pushing the car along, while 2K rpm on the Baleno is brisk and raring to go. Petrol anyday !!!

+1 to that.I too feel that petrol cars with their much more consistent power delivery is way more fun to drive than an average diesel car that we see today.Btw,if what I read is correct diesel will die before petrol because more oil is required produce diesel when compared to petrol.The production of the eco-friendly diesel that was recently developed(IIRC) requires even more crude oil.

Originally Posted by oxyzen

In the lower segment (3-6)L, petrol will dominate. For someone who can only afford a car within a 5L bracket, the initial 1L price difference is a lot. But someone who is paying 10L for a petrol will not mind spending 1L more for a diesel. He sees it as an investment opportunity.

The other group with typical Indian mentality: They worry too much about running cost. It hurts every time they visit a petrol station. They are okey with spending a 100K beforehand without doing any further calculations.

And finally the torquey diesel motors is the biggest factor which lures customer to shift to diesel.

I still don't understand why you keep saying that!There are diesel cars that are fun to drive like the Chevy Cruze but that doesn't mean that no other petrol car is fun to drive.The difference in fuel price and mileage are definitely the reasons why people go for diesels.Not just the people but even manufacturers produce diesel cars mainly because of these reasons.Torque is important but also keep in mind that it's nothing without horsepower.I'm not trying to start a torque vs hp battle here. The performance gap between petrol and diesel becomes narrow as the budget increases but that's not the story down at the bottom (where 80% of the Indian cars belong to).

[shamanth]

Imagine if small diesel bikes are launched, like bullet. Already smaller cars are getting Diesel engines like Beat. Govt of India will go bankrupt providing subsidy to diesel.

I think if Govt maintain this price difference, shortly 80% of cars sold will be diesel and govt may not be able to cope with the subsidy, and would need some drastic change.

[oxyzen]

Originally Posted by fast&furious

I still don't understand why you keep saying that!There are diesel cars that are fun to drive like the Chevy Cruze but that doesn't mean that no other petrol car is fun to drive.

I dont deny it.
Petrol and diesels both are fun to drive in their respective ways. However, a decade ago this statement was not true. Diesel meant sluggish and polluting. Not any more.

Originally Posted by fast&furious

I don't think anybody will buy a diesel car because it's fun to drive. Compare an average diesel car with an average petrol car.The petrol car will usually finish first in almost all aspects except fuel economy.You might get that sudden surge of power with the diesel as the turbo spools but I like the consistency of a petrol engine with those extra HPs a lot more.

Now this is where you are seriously wrong.
You would be surprised to know how many people buy buy diesel just for the sake of driving pleasure. A year back I remember a poll between Swift Petrol & Diesel just from driver's POV in Team BHP itself. Although I voted for the K-12 (since the lag is the diesel was a bit of put off for me) the diesel actually had more votes 60:40 I guess!
My point is there are a lot of people who appreciate the torque of oil burner and buy just for the sake of it. Efficiency comes as an added advantage.

Even while calibrating a petrol engines, the demand from marketing is to have the peak torque at low RPM. HP be damned. I believe it is a very good move.

Considering the current market situation, Vento, Linea (leave the T-Jet alone) offer far better performance in the diesel avatar. And trust me you just cant argue on this one.
Even, Figo, Optra diesel can smoke the petrol counterparts with ease. Yes they do have higher CC.
However, other cars like Beat, NFS are supposed to be much better off in the diesel versions. (I have not driven these yet)

Sure there are excellent Petrol engines. Fiesta 1.6, City, Civic. And you can enter in an unending debate on Cruze vs Civic.

Punto 1.3 is highly sluggish. Even the 90BHP version. Courtesy to in-appropriate gearing and being overweight. Baleno had an awesome 1.6L engine with loads of torque on tap. Sure it is better than the Punto. Its ideal competitor would be a proper 1.6L diesel. Vento / Verna.

BOTTOMLINE- Petrols are good to drive. Diesels are equally good if not better IMO.

[vinaydas]

Diesel is not immune to inflation. Diesel prices will go up and eventually will lead to the death of the "fossil fueled car". Petrol cars will still be in production as long as diesel cars are present.Since there is a lot of pressure put on this whole issue of diesel being cheaper, I'm very sure that in the next years budget ,If not the price of diesel increases ,The overall factors involved in owning a diesel car will become more expensive.
With More and More manufacturers jumping on the diesel wagon (for gods sake even two wheeler manufacturers are hinting at diesel bikes.) expect the government cash on this diesel craze that is going on.

The only solution right now to shut people up is to increase diesel prices or to reduce petrol prices.
Its not only the government that are milking people, its the manufacturers are who are having a gala time. Slap the diesel badge on a car and the manufacturer is free to charge whatever he wants for the car (ala i20).

My message to people : be sensible and buy a diesel car only if u need it. There is absolutely no need of a diesel car whose monthly running is <500 kms.

[fast&furious]

Originally Posted by oxyzen

A year back I remember a poll between Swift Petrol & Diesel just from driver's POV in Team BHP itself. Although I voted for the K-12 (since the lag is the diesel was a bit of put off for me) the diesel actually had more votes 60:40 I guess!
My point is there are a lot of people who appreciate the torque of oil burner and buy just for the sake of it. Efficiency comes as an added advantage.

Even while calibrating a petrol engines, the demand from marketing is to have the peak torque at low RPM. HP be damned. I believe it is a very good move.

Considering the current market situation, Vento, Linea (leave the T-Jet alone) offer far better performance in the diesel avatar. And trust me you just cant argue on this one.
Even, Figo, Optra diesel can smoke the petrol counterparts with ease. Yes they do have higher CC.
However, other cars like Beat, NFS are supposed to be much better off in the diesel versions. (I have not driven these yet)

Sure there are excellent Petrol engines. Fiesta 1.6, City, Civic. And you can enter in an unending debate on Cruze vs Civic.

BOTTOMLINE- Petrols are good to drive. Diesels are equally good if not better IMO.

Well, most of the swift owners own its diesel variant.So I'm surprised why there was only a 20% gap .And IMHO a petrolhead's point of view is very different from the average Indian car buyer's point of view.Most of them don't even understand the torque factor.Even the so called local experts just look at the HP only.I have no doubt in my mind when I say that atleast 80% of the diesel car owners bought them because of the fuel efficiency and price of diesel.

It's good to have the peak torque at a lower RPM but then you need the HP to keep things going.More HP means more and more speed.

Btw,I don't think it's a good idea to compare the petrol and diesel variant of the same car especially since there is a noticeable price difference.I think if we give VW that same amount of money (that they used create that diesel engine) to build a petrol engine,they would come up with something that is several times better than the existing diesel engine.

[xingamazon]

Guys sorry for going off topic.

There are seperate thread for discussing the price of Diesel price vs the Petrol price.
and there are also threads discussing how Diesel engine Vs Petrol engine.

All the comments I see in this thread are not actually related to the thread topic.