[vivekz]

The recent reduction along with the status quo last quarter begs the question, are the private oil companies like Shell actually selling fuel at 2-3 rupees below Government OMC rates? This would be a good opportunity for them to start gaining customers as 2-3 rupees difference is enough to sway decision.

While we don't have then in Mumbai, people from Bangalore, Pune, etc can comment on the latest situation.

[romeomidhun]

What a pathetic situation! Brent is trading at $68 (almost half the all-time high rates of $120), and here in India, a 90 paise reduction in Petrol prices! Lot of talks and more talks, and no motoring-people-friendly action. Due to reduction in international oil prices, "Ache din aaya" for oil companies and their friends.

We talked a lot about security of cars and blamed manufacturers for not providing those features in base versions. But, they have given an option for people to get those features even though in the higher variants (exclude those budget A-cars). But, when it comes to "financial security", it's the govt and oil companies who is robbing people by charging so high at these circumstances. And people don't even have an option!

And, just because we used to pay Rs 75/- for Petrol doesn't make the current prices of Rs 67 justifiable.

[saurabhkum]

Originally Posted by romeomidhun

What a pathetic situation! Brent is trading at $68 (almost half the all-time high rates of $120), and here in India, a 90 paise reduction in Petrol prices! Lot of talks and more talks, and no motoring-people-friendly action. Due to reduction in international oil prices, "Ache din aaya" for oil companies and their friends.

We talked a lot about security of cars and blamed manufacturers for not providing those features in base versions. But, they have given an option for people to get those features even though in the higher variants (exclude those budget A-cars). But, when it comes to "financial security", it's the govt and oil companies who is robbing people by charging so high at these circumstances. And people don't even have an option!

And, just because we used to pay Rs 75/- for Petrol doesn't make the current prices of Rs 67 justifiable.

Totally agree with you...
Last 6 months would have been really favorable for our Govt to have been able to pass on the ache din effect to common man but sadly they choose other way round. Even media today is not giving the true picture in their newspaper of channels, currently they are mentioned Petrol Prices reduced AGAIN by 0.xx Rs and Diesel by 0.XX Rs, this is the xth cut in last 3 months. Why are they not telling how crude has behaved in the same period. Either OMC's should announce that fuel is no longer deregulated or provide the entire breakup of their method of arriving at the crude price calculation. Last time they increased tax and showed that the same is being absorbed by not reducing the rates, now this time it's their profit margin's which has been increased without even informing anyone. I may be wrong but I've not come across any new article stating that they have revised their selling rate by changing their margins. Very soon we all stop tracking International crude rate ( even if it goes below 60$) because we all or atleast I'll start feeling that Petrol Prices are not related to Crude moving in downward direction.

[adimicra]

Agree with the sentiment here...total lack of transparency from the OMC's regarding the pricing. What has increased? The taxes or their profit margins? The media needs to ask them the question and force an answer. This goes to show that the fuel prices are NOT decontrolled and the Govt along with the PSUs are manipulating the prices for their benefit. I feel bad because I expected much more transparency from this Govt.

Anyways, this is a great opportunity for private companies to gain market share by pricing fuel below the PSUs... But, is that happening? If not, why?

I will probably go for a refuel from Essar tonight and see whats going on.

[poloman]

Originally Posted by adimicra

Agree with the sentiment here...total lack of transparency from the OMC's regarding the pricing. What has increased? The taxes or their profit margins? The media needs to ask them the question and force an answer. This goes to show that the fuel prices are NOT decontrolled and the Govt along with the PSUs are manipulating the prices for their benefit. I feel bad because I expected much more transparency from this Govt.

Anyways, this is a great opportunity for private companies to gain market share by pricing fuel below the PSUs... But, is that happening? If not, why?

I will probably go for a refuel from Essar tonight and see whats going on.

Deregulation means the oil price will be decided by the oil companies in their wisdom. It does not mean that price will be reduced as we wish. Companies are here to make profit. Why this hue and cry only for petrol. The rubber prices have crashed 70%. Are we seeking 70% cut in tyre prices. Can any one list the price of few commodities which are fully transparent?

[adimicra]

Originally Posted by poloman

Deregulation means the oil price will be decided by the oil companies in their wisdom. It does not mean that price will be reduced as we wish. Companies are here to make profit. Why this hue and cry only for petrol. The rubber prices have crashed 70%. Are we seeking 70% cut in tyre prices. Can any one list the price of few commodities which are fully transparent?

Yes, but these companies are Govt owned not private.
So, they should explain to people why the prices are not decreased in accordance with the crude prices. If they have increased their profit margin, so be it but lets have some transparency.
All these days when the crude prices were high, all these companies made so much hue and cry about the "losses" they are making per liter of fuel. Now, since they are making more profit, they should be upfront about it. No?

Also, the participation from private players is very less in this commodity. So, the theory that "let the market decide the price" really does not apply here. The fact is as of now the fuel pricing in India is controlled totally by the OMCs and the govt.

[vjjustin]

I read earlier in this thread someone complaining that the mainstream medias do not report that the reduction in oil prices is not enough. Saw the following report in economictimes. Found it interesting, some relevant quotes and the URL.

International crude prices have dropped 40% since June to $70 a barrel on Friday, but the reduction in pump prices of petrol and diesel are not in that proportion, they said. Petrol prices have been reduced by a little over 11% and diesel by 8% since June.

Executives at state-run oil firms, however, said that in a bear market, the global price of refined products falls after a lag. Retail prices of petrol and diesel are also affected because of the rupee-dollar exchange rates, they said.

The government has informally nudged state-run firms to keep a small margin on fuel prices to prevent consumers from volatile global oil markets especially during the crucial elections in Jharkhand and Jammu & Kashmir, government and industry officials said.

Despite a hike in central excise on petrol and diesel in mid-November, there was a scope to reduce fuel prices by 50 paise to Rs 1 per litre on November 15. But oil companies silently usurped the amount

Although the government officially deregulated diesel in October, just as it did in case of petrol over four years ago, the oil ministry retains informal control on retail prices.

URL: http://articles.economictimes.indiat...l-prices-litre

[ILTDrive]

Originally Posted by adimicra

. Now, since they are making more profit, they should be upfront about it. No?
.

+1 to this. I remember the days when the papers used to be flooded with the 'perceived losses' theory every time there was a discussion on fuels. Now that they longer are in losses at least for petrol and diesel, I wonder why aren't they coming out with their stand.

[vipul_singh]

Just came across a well reasoned article on Global Oil prices:

http://www.thetruthaboutcars.com/201...urn-truth-oil/

While I have pasted an excerpt below, do check out the article itself since the discussion thread is equally interesting.

Excerpts:

"...in 2015 the rules of how the price of a barrel of oil impacts the United States economy has changed. In 2014 total OPEC imports are projected to be at 1985 levels, and less than 40% of total US imports. In October of 2013, the United States reached a major tipping point, producing more oil than it imports. Refined petroleum products has been the largest US net export in terms of dollars, since 2011. When I consulted for Conoco in the 90s there was a lot of talk about shale oil reserves, but how it was not cost effective to tap them. Fracking has changed that, and the United States is currently in an unprecedented oil boom. In North Dakota if you have a pulse, you can work 80 to 100 hours a week, make $17 an hour at Walmart, and yet, there still remains a serious labor shortage.

China is now the largest car economy in the world, and we are seeing the impact from this in the United States. From tax friendly (in China) engines under 1.5 liters in American cars and CUVs, to interior and exterior design and features made for Chinese consumers carried over into other markets. Our declining dependency on foreign oil, and our concurrent shrinking consumption is a blessing, and a curse.

At $70 a barrel, fracking operations profitability start to become problematic. We know from over 70 years of history, that if pricing reaches a point where a certain production source becomes too costly, these sources are turned off, supply tightens, price increases, profitable sources are turned back on. We’ve seen this cycle of boom and bust multiple times since 1972. For a lot of complex reasons, the price of oil does not follow a rational price curve during these peaks and valleys, and both are dangerous to the economy. In the Gulf of Mexico, oil producers are already stacking offshore rigs, because the cost of production at some deep water sites is too prohibitive at current market prices.

At $70 a barrel, most OPEC nations can’t fund their governmental operations effectively. When this happens, OPEC has historically dialed production back, raising prices, but that didn’t happen. Only Kuwait and Qatar are in the black. But what is of bigger concern is at $70 a barrel, crude from the Canadian Oil Sands is unprofitable along with United States ethanol, found in 10% quantities at a gas station near you.

There are those who will say that the market is being manipulated to put the squeeze on Russia, Iran and ISIS (or ISIL or IS if you prefer). However Russian oil operations are still profitable at $50 a barrel, and Iran’s oil operations are unprofitable at almost any oil price point that the global economy can sustain, and remain healthy (Iranian crude is very heavy, very sour, hard to refine, and not preferred by buyers).

The Russian economy is definitely being squeezed by the plunging global oil prices, with the Russian economy generating 60% of its revenue from energy sales, 50% of that from oil exports, there is little motivation for Russian leadership to cause too many problems in Ukraine, or declare a Western Europe embargo. For now, the fear of the full Stalin treatment has kept the Russian elite quiet in their public criticism of Putin’s actions, but sanctions are taking their toll.

Saudi Arabia tipped their economic hand yesterday. They’ve declared a war on the price of oil and are willing to put their $576 billion in cash reserves on the table to slow down North American oil production. Economists predict that Saudi Arabia can fight a two year financial war of attrition in an attempt to slow down advancing United States, Canadian, and Mexican production.

You must always remember, oil is a global commodity. American buyers (meaning you and me) are cheap and we actually enjoy lower prices than most of the globe (if you eliminate third world Hell holes and banana republics). But oil and gas companies are not charities, they answer to shareholders. Fracking operations can be profitable down to as low as $45 a barrel, for existing wells. There is the technicality – existing wells. At $70 a barrel it is questionable that new wells will be profitable, and fracking wells have a short production life. If the producers become convinced that this isn’t a seasonable valley, decisions will be made based upon the quarterly balance sheet, and new wells won’t be created. With Saudi Arabia declaring financial war, don’t be surprised if you see new fracking operations slow down.

Supply will tighten, jobs growth in North Dakota, which is unsustainable, will level off, and eventually the price will start to climb back. Employment in the Oil and Gas Sector has grown 40% nationally since 2007, representing the lion share of all private sector job growth in the United States economy since the Great Recession.

There is the double edged sword. If the price of oil drops to under $60 a barrel, and US production is curtailed, the typical improvement in the US economy from each American getting a boost in disposable income, could be blunted with the loss of jobs in our booming energy sector. Think 1986.

For now, China is quite content growling at its neighbors over oil rights in the South China Sea, and letting western interests secure their oil contracts in the Middle East. They will also happily slurp up every drop the United States chooses not to use either through fuel economy improvements, or economic decline.

A serious oil bump is coming (I won’t say crash – yet , but bump) – and that’s problematic for the United States in particular. The economies of North Dakota and Wyoming have “bubble economy,” written all over them, and the benefits of the booming US oil industry have rippled through all sectors of the US economy.

Keystone XL has taken on an additional sense of urgency for Canada, because Keystone XL is not about reducing American oil imports from the Middle East and Venezuela by 40% (Middle East imports are already in freefall and Chavez is dead) or creating American jobs. It’s about Canada getting its relatively expensive tar sand oil to markets willing to pay the price in Asia and South America. If American purchases of their more expensive oil declines in favor of cheap OPEC crude, the Canadian economy and the companies surrounding the industry will get hurt. That is what Saudi Arabia is banking on. If Saudi Arabia can hurt the economy of Iran in the process, and slow down the growth of religious extremism outside their borders, even better.

The real reality is this. The price of gasoline at American pumps will never return to late 1990s levels. It is an economic impossibility because the overall cost structure for production won’t support those price points anymore. In inflation adjusted dollars, another 18% drop in WTI futures prices will put us square into 1986 oil crash price points. Economics 101 and the laws of supply and demand always take control.

Enjoy the cheap gas for now, eventually it will go back up and when it does, it will go up fast and hard under the wails of peak oil, drill baby drill, and those pesky Chinese are using up the supply. Oh, it will likely put the globe back into another recession."

[sdp1975]

Govt raises excise duty on petrol, diesel again to meet fiscal deficit targets :

http://www.moneycontrol.com/news/eco...n_1242677.html

[ramanak]

There you go.Excise duty hiked on Diesel(@Rs.1/L) and Petrol(Re.2.25/L).

[audioholic]

So the actual cut in fuel prices had to be ₹3 per litre. The government swallowed two and gave us one. Would have liked it the other way actually.

But I somehow seem to like this game. I guess we can see stable fuel prices in the future. With the government varying taxes inversely with oil prices.

[ILTDrive]

So, the actual quantum of reduction should have been what was announced earlier+the excise duty amount, which is in line with the expectation.

Did someone mention that petrol and diesel are deregulated? Guess that was a joke on the mango man. :(

[vivekz]

Excise duty on petrol and diesel hiked!!

Hike on petrol is Rs. 2.25 a litre while diesel gets a Re. 1 hike, both effective tonight.

Hope this is not passed to the consumer. But this is turning into a greed rather than a opportunist move.

Here is the link:

http://www.moneycontrol.com/news/eco...1_1242677.html

Seems the hikes will not be passed on to consumers.

[arun_kun]

Saw in one of the news site that the retail price wont change. Instead of lowering the retail price in the backdrop of recent fall in crude oil price, govt opted to fill their pockets.

Edit: Source: http://www.thehindu.com/news/nationa...?homepage=true