Crude price is down in the $120s and falling. Hope this translates to lower prices! Here, in the UK, petrol was £1.19 and Diesel £1.38 last weekend. Thankfully, most retailers like Tesco are offering 5 P off from the day crude prices started dropping.
One quarter of India's crude oil requirement is met by domestic production. ONGC supplies crude to oil PSUs at $55 per barrel. Even if the barrel price is $130 in international market, it costs India just $112.
A barrel of crude is equivalent to 159 litres. It costs Rs.29.39 a litre. Refining costs add up to 0.20 paise to Re.1. In fact, Tapan Sen, RS MP and a member of Standing Committe of Parliament on Petroleum and Natural gas says it is 93-94 % of crude and the remaining is the refining cost.
Even if the petroleum products are not imported, the cost of it is calculated by taking an average of fortnight of international prices, add to it the freight charges, customes, taxes and the refinery charges etc. Though these products are not actually imported, the import-parity mechanism simply assumes they are imported. So, the under-recoveries due to raisng global prices of crude arguement is fictious.
Between April - Dec 2007, the IOC revenues increased by 52 % and the Oct-Dec 2007 quarter reported a 17 % increase in profits over corresponding period the previous year. Figures for HPCL and BPCL are similar. This, I believe is not the industry which is crying itself hoarse that it is suffering from losses.
A proposal to raise petrol prices by 2.50 rs every month till march 2009 and diesel prices by 0.75 rs every month till 2010 has been mooted.
The ET article i read this morning mentioned something on below lines for the differential pricing mechanism.
> 50p or Re.1 extra in metro's,and
> another Re.1 or Re.2 for low-mileage(guzzlers) cars
But i am unable find the article now...
Petrol prices to be hiked by Rs2.50 monthly till March 2009.
While I saw a thread on SUV owners and slum dwellers needing to pay Rs.2 more per litre of diesel, I think the following news item escaped the attention of tbhp-ians.
If the recommendations of a committee set up by Prime Minister Manmohan Singh to study the financial health of the state-owned oil companies are accepted, then petrol prices may increase every month by Rs 2.50 so that market rates are reached by March 2009.
Courtesy : The Deccan Chronicle, Chennai edition dtd 11-Aug-2008
While I have been one of those that shout against every petrol price hike, I think this is not without its merits, reasons being :
1. If the procurement price of a product increases, naturally those that consume it should pay accordingly. Not a good move to sell below cost price. See Note-1.
2. A hefty hike of Rs.5 per litre of petrol has seen quite some Indians start to respect the fuel and avoid unnecessary car/bike usage. And even start patronising public transportation, where available. And this has been seen even in the US of A, where public transportation usage has increased and we are seeing a shift from fuel-guzzling SUVs to FE small cars.
3. It has been proven that hiking prices of fossil fuels leads to rational usage of the same among the public. See Note-2.
Note-1 : I know that the actual cost per litre is only 25bucks or so, with the rest being all sorts of taxes and duties. But those taxes are used for development of the country and if removed, could put a spanner in the wheel for many development activities planned by the Govt.
Note-2 : This has been proven in Denmark (as per an article in the same paper yesterday) where after the oil shock of the 70s, they decided to move away from being dependent on MiddleEast oil and from a 90% dependence, they are now at 0% dependence on oil import. Part of the strategy was imposing huge taxes on oil products, encouraging alternative sources of energy like wind, promoting cycling etc.
So, if the Govt's plan goes through, and they start the hikes in Sep'08, in March '09, petrol would be priced at Rs.72.5 ex-Chennai. Not bad I guess, if it makes us use the resource rationally.
And while they are at it, maybe they should also hike diesel prices monthly so that by Mar09, it becomes on par with petrol, like it is in most parts of the world.
Last edited by aah78 : 13th August 2008 at 20:01.
Reason: Thread merged with existing.