[echo77]

What we need to look out for is how much change will be made in central and state taxes of both the fuels. IMO, diesel taxes will continue to be less for fears of rising inflation due to commodity transport costs. When totally unregulated, the price of diesel will be approx Rs 10 cheaper than petrol because the central excise on diesel is about Rs 10 less than petrol.

[KRRaj]

Originally Posted by vinaydas

I really don't see why people are so upset with increase in fuel prices. Almost Every one is earning more than what they used to do when petrol was Rs 50, with all those pay hikes and all. So it is logical for the government to stop spoon feeding (subsidizing) and creating loses upon themselves.
Yes people say that they need to reduce taxes etc , But we must keep in mind that fuel is a source of income for the govt and the country cannot run without taxes.

yes, but the fuel price hike has a cascading effect. The Bus fares have increased, seems like the auto guys are also going to hike their fares and the groceries are going to increase as well. There, all the extra hikes which we got has been neutralised.

OT: The Government needs taxes to run, but instead of burdening the salaried class who pay the most taxes, they should do a better job of catching the tax evaders and making them pay. How many of our celebrities for instance actually pay the correct tax?

[Abhi_Automobile]

I agree. I have been riding in my cycle to office for many months now. And I hate to ride in those dry dust and especially when the BBMP staffs cleaning the roads. But then, its not always and all through the route. So, its ok.

This is a great initiative from you. I hope more and more people think like you do.

Here comes the real controversial set of statements:

This is possible in Bangalore because:

1) People belong to mostly service class (read IT) and thus are more open minded. Generally, the more the middle/upper middle class, the more such initiatives.

2) Huge traffic congestion leads to hours of frustration in traffic jams.

3) Great weather conditions.

4) People like to 'save' money (I refrained from using any other term). Usually will prefer Cycle>Bike>Car (Small)>Car (Sedan). A person earning 1 lakh a month will generally save more money in Bangalore than in Delhi (Just an observation, not a comment!)

5) People have a tendency to buy automobiles based on 'requirement' rather than 'aspiration'. This is both good and bad.

This is not possible in Delhi because

1) Dominated by Businessmen. They generally don't entertain such ideas.

2) In Delhi, the impression is that you buy a bike when you can't afford a car. Very seldom do people ride motorbikes (let alone) cycles, by choice. Junta buy a car before they buy a house. Do you think they will ride a bicycle ??

3) Huge distances to cover. Very impractical unless you have office nearby, which is seldom the case in Delhi. Remember, unlike Bangalore, Delhi does not have much 'floating population'. Most people have permanent residence. They all prefer to commute and not change their homes.

4) Way better infrastructure. You can actually drive if you want. I mean, in India, we don't have much infra anyway, but Delhi is probably the best.

PS: I am a Delhiite who lives in Bangalore. I have actually seen these trends. BTW, I like both cities.

[aby]

Originally Posted by Thad E Ginathom

My understanding is that diesel is a cheaper fuel to produce than petrol, so, all other things being equal, diesel would be cheaper fuel anywhere.

For reasons that I don't quite remember, the UK govt, a few years back, decided to increase the taxation on diesel so that it became more expensive, having previously been cheaper, than petrol.

My comment only refers to UK pump prices: it is such a complex issue that I wouldn't attempt an analysis, but I do not think that it implies that deregulated prices anywhere else in the world would make diesel more expensive than petrol. My guess is that it should not be.

Actually it is incorrect. Comparing liter by liter of Diesel to Petrol, diesel needs 10% more crude oil compared to same volume of petrol.

Overall refining costs are more or less the same, which means that in an ideal and non taxed world diesel should be slightly more expensive than Petrol.

In western free markets there are hundreds of factors which determine the pump price of both fuels
1) The distance traveled by fuel from refinery to the pump: Remember not all fuels are distilled in the same refinery. In many cases Diesel travels larger distance.
2) Govt. taxes. In US (and in many countries of Europe) both fuels suffer different rate of taxation.

In India however the taxation on petrol and diesel is ad valorem (at value). So even though the Govt. shouts from rooftops that the oil companies lose crores due to rise in crude oil prices, what they hide from all of us is that

1) They collect higher customs and excise on higher landed cost of crude
2) State Govts. collect higher sales tax.

Why can't the Govt. fix a fixed amount per unit of fuel sold and then freeze the price of petrol/diesel. That way everytime crude prices go up we won't face a triple/quadruple whammy in form of
1) Higher Customs duty paid by Oil Cos
2) Higher excise duty paid by refiners
3) Higher sales taxes collected by State govt.

So a one rupee price increase in cost of fuel translates to 1.67 increase in price of pump.

So unfair... but then who said life is fair.

[srishiva]

Diesel costs more in the U.S because the refineries are setup towards refining petrol more than diesel. This is the case in U.S and am not sure about other countries. It should generally not cost more than petrol otherwise.

[echo77]

Just for everyone's info:

1 oil barrel = 158.987295 liters

how many liters in oil barrel - Google Search

So, if oil barrel is at $80, each liter of crude oil is about $0.50 (about Rs 23)

[cuboid]

Originally Posted by echo77

Just for everyone's info:

1 oil barrel = 158.987295 liters

how many liters in oil barrel - Google Search

So, if oil barrel is at $80, each liter of crude oil is about $0.50 (about Rs 23)

the $80/barrel price is for crude oil, there are refinery costs after that. the reasonable price for petrol in india, without any govt taxes, would be ~ Rs 30/lt

[echo77]

Someone mentioned that factory gate price of Petrol currently was approx Rs 23. This is after refinery costs. Not sure if it involves company profits and transportation.

Current crude oil barrel is hovering around $74 for a while, which means:
$74/159 liters = $0.465/liter = Rs 21.4 / liter

Additional cost/liter = Rs 23-21.4 = Rs 1.6/liter? Does that number make sense if we consider the volume of usage?

Its more than just refinery costs:
crude oil liter: ? (depends on oil barrel)
refinery cost/liter: ?
transport cost/liter: ?
marketing cost/liter: ?
dealer profit/liter: ?
company profit/liter: ?
what else??: ?

[sajands]

Diesel prices to go up by 3.14.

Soruce Rediff.com

Diesel likely to cost Rs 3.14 more: Rediff.com Business

[lohithrao]

Yes, that means difference between diesel and petrol price is getting reduced.

I was thinking of a diesel car and fuel price was one of the key reason for it, now i guess need to think of a cycle

Originally Posted by sajands

Diesel prices to go up by 3.14.

Soruce Rediff.com

Diesel likely to cost Rs 3.14 more: Rediff.com Business

[mjothi]

Originally Posted by sajands

Diesel prices to go up by 3.14.

Soruce Rediff.com

Diesel likely to cost Rs 3.14 more: Rediff.com Business

I am seriously confused if this will really happen. Esp when the inflation rates are in double digits.

Btw, when is the next lok sabha election

[BaCkSeAtDrIVeR]

@lohitrao - think of the FE and turbo kick. You will be happy even if diesel is more expensive than petrol.

[xingamazon]

Originally Posted by mjothi

I am seriously confused if this will really happen. Esp when the inflation rates are in double digits.

Jothi,
You need not worry, the deruglation of fuel prices especially the diesel is only going to reduce the inflation. It surely wont grow higher.

Note that in a short term it will probably shoot up, but in long run, all the prices are going to stablize post deregulation.

[srishiva]

If diesel price equals petrol price, the cost of diesel cars will ensure that whatever FE gains are made are useless. Unless it encourages our local auto makers to continue churning out worse diesel engines and the toothless emission norms support them.

[sgiitk]

I think the Parikh committee considered that the diesel taxation will have to be kept lower. This is why they propose a Rs.80,000 one time levy on Diesel cars.