[lurker]

Originally Posted by hyper-VTEC

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.

>> there should be atleast Rs 2 cut, i feel

then maybe with great hesitation and screeching noise, there will be 50p reduction.

[dass]

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

http://profit.ndtv.com/news/commodit...mpaign=story-8

[sgiitk]

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.

[Desi Dybuk]

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.

[StarScream]

Originally Posted by lurker

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.

[hyper-VTEC]

No changes coming this fortnight. No news till now, its almost 9PM.

[lurker]

Originally Posted by StarScream

They are probably thinking

ok they will 'start thinking' whenever it is time to reduce prices. Good strategy.

[StarScream]

Originally Posted by lurker

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.

[lurker]

there is also the question of accumulated losses

accumulated losses of what ?

[sou_3749]

Originally Posted by blacksport

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.



Time required to recover 128904 without selling the car is 2.5 years. After that the diesel owner makes profit.

[StarScream]

Originally Posted by lurker

accumulated losses of what ?

Accumulated losses from selling fuels below cost.

[khoj]

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.

Originally Posted by StarScream

Accumulated losses from selling fuels below cost.

[StarScream]

Originally Posted by khoj

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?

[lurker]

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.

[gsurya]

Originally Posted by lurker

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.