[Mohan Mathew A]

Originally Posted by V.Narayan

Agree with you. Good point.
The best answer is from Hayek. I quote below

One of the fundamental principles of taxation (any tax) is that it should be in accordance with the ability of the people to pay. So, if your argument is that the average citizen of a low income country like India should be paying taxes in line with what citizens of UK or Singapore pay and more importantly has the capacity to pay that, then i will have to respectfully disagree.
We seem to have a fundamentally different understanding of taxation principles and the paying capacity of our fellow countrymen (again, I am not talking about the top 5 to 10%, but the average Indian)

Taxation at INR 75/litre would mean retail price at around INR 120/litre. I hope you would mull over that number.

[Dry Ice]

Originally Posted by Hayek

The next government should aim to take taxes on fuels to at least ₹75 per litre.

It will soon be a reality I am sure.

I wonder what impact would that have on our society.

[longhorn]

ET Article and analysis on the fuel loot in India.

https://economictimes.indiatimes.com...utm_content=20

Inspite of a 22% drop in cost, the dip at the pump is less than 1/3rd of what it should have been. Now people will say its the price for nation building. If that's the case, what the hell are they doing with the loot already in place before this. And I am not even bringing the Swach Bharat cess into the picture.

[turbospooler]

Originally Posted by longhorn

ET Article and analysis on the fuel loot in India.

https://economictimes.indiatimes.com...utm_content=20

Inspite of a 22% drop in cost, the dip at the pump is less than 1/3rd of what it should have been. Now people will say its the price for nation building. If that's the case, what the hell are they doing with the loot already in place before this. And I am not even bringing the Swach Bharat cess into the picture.

There is something called as Inventory and its valuation based on the purchase price. As the crude price has softened now, this purchase price for OMC will be when they actually purchase it at that rate and when that crude lands in India. So, there will always be this mismatch between current crude price and price of the crude basket of India.
That said, Government has acted (over)smartly by not passing on full benefit.
Hope they pay the price in the upcoming state elections.

[longhorn]

Originally Posted by turbospooler

There is something called as Inventory and its valuation based on the purchase price.

If that's the case, should it not be applicable when the price of crude rises too. I don't see more than a 2-3 days delay at the max to reflect this change whenever crude rises. Its only when crude dips that all these excuses happen.

[turbospooler]

Originally Posted by longhorn

If that's the case, should it not be applicable when the price of crude rises too. I don't see more than a 2-3 days delay at the max to reflect this change whenever crude rises. Its only when crude dips that all these excuses happen.

If you have any data, do share so that I can correct myself.

[84.monsoon]

Originally Posted by longhorn

If that's the case, should it not be applicable when the price of crude rises too. I don't see more than a 2-3 days delay at the max to reflect this change whenever crude rises. Its only when crude dips that all this fekugiri happens.

Agree. Inventory impact has to be always borne by the supply chain players, i.e., distributors and retailers. When Apple raises or drops the price of the iphone, the effect if felt instantly at the retail end. We do not worry about inventory held by distributors or retailers. Any mark-up or mark-down profits/losses has to be borne by the likes of IOCL/HPCL/BP. Especially as oil moves up and down, there should be fairly equal opportunities where mark-ups/mark-downs happen so there should not be a major next loss or gain over the course of a couple of years.

We need a really transparent pricing for fuel --> Crude landed price + refining and distribution margin + Profit mark-up percentage + GST and this needs to be re-calculated daily and one national price fixed at the pump.

[Vitalstatistiks]

Originally Posted by longhorn

ET Article and analysis on the fuel loot in India

So this brings out the position clearly, right? In case of Petrol- the cost to refiner has come down by 22.3%, but the cost charged to the dealers has come down by only 10%. The beneficiaries are :

(a) The Companies themselves, pocketing the extra margin (margin on petrol has increased from Rs. 1.20 per litre to Rs. 6 per litre :-o )

(b) The state governments, which charge tax on ad valorem basis. Meaning higher the price, higher the tax. The Central govt. gets fixed amount no matter what the price.

[longhorn]

Originally Posted by Vitalstatistiks

The beneficiaries are :

(a) The Companies themselves, pocketing the extra margin (margin on petrol has increased from Rs. 1.20 per litre to Rs. 6 per litre)

I guess a close look at the shareholding pattern of these companies will reveal the actual beneficiary.

Attaching a chart show crdue vs petrol price. Look at the fag end of the chart (Jan 2017) when both move in opposite directions.

[swissknife]

Originally Posted by longhorn

Attaching a chart show crdue vs petrol price. Look at the fag end of the chart (Jan 2017) when both move in opposite directions.

From this graph, I have the following inferences

1. There was a considerable loss around 2008, when the cost of crude was very high

2. They were on par on 2009

3. Prices were lower than the cost from 2009 till about early 2015 though the trend of prices were similar

4. Come 2015, the prices were higher than cost and in sync.

5. Come 2017, they aren't in sync. Lower cost and higher prices.

[longhorn]

The previous dispensation cushioned the common man from the impact of high oil prices by keeping the price artificially low. Not a good idea. A few months after the current dispensation came, crude oil prices crashed. Not only did they enjoy all the benefits of lower crude oil prices, they ensured that almost nothing barring a few peanuts for namesake is passed on to the public and at the same time, kept on blaming the old dispensation for all the ills which is essentially of their own making.

Budget is everything. You prepare plans according to the budget and not vice versa.

[SoumenD]

Filled at 75.4 yesterday at Indian Oil, begur road. Good to see those numbers after a long time. Tankfull(till auto-cut) usually takes around 28-30 litres for my Estilo from 1 or 2 bars. Last time it was 84.xx a month back , so total difference in bill ~260.

[m8002?]

Originally Posted by Vitalstatistiks

So this brings out the position clearly, right? In case of Petrol- the cost to refiner has come down by 22.3%, but the cost charged to the dealers has come down by only 10%. The beneficiaries are :

(a) The Companies themselves, pocketing the extra margin (margin on petrol has increased from Rs. 1.20 per litre to Rs. 6 per litre :-o )

(b) The state governments, which charge tax on ad valorem basis. Meaning higher the price, higher the tax. The Central govt. gets fixed amount no matter what the price.

Also with the govt. being the biggest shareholder, the companies regularly declare dividends which also goes to the govt. kitty.

I remember reading long back how the PSUs do budgeting. They first decide on their cost, then top it with what ever profit they "want", and then arrive at the price of fuel. This was before the price was deregulated.

[GTO]

Mod Note: Again, please do NOT discuss politics on Team-BHP. Some posts have been deleted.

Going forward, we will be infracting any members who discuss politics on this thread.

Thanks for the support & understanding

[swissknife]

The moderators may want to close this thread or keep it just to record the prices of fuel.

Given that the prices of fuel are decided by governments, discussions around which are restricted, we may not be able to find reasons, give suggestions and whatever else on this topic.