[freakmuzik]

Originally Posted by vina

First of all the oil companies do not pay spot prices - they buy most of their crude from long pre-agreed contracts, so spikes in fuel prices do not effect them as much. When the spot price was $140, the price paid by these guys may have been lower.

second even after the present price hike the PSU oil marketing companies (OMCs) will be making losses. When crude was $140/barrel, they were making huge losses.

Usually when the crude prices fall to levels where they can make profits - they make up their past losses and hence do not reduce prices immediately. If in the meantime crude rises again, they can obviously not reduce prices.

I understand the whole thing. Ok so I have a few questions here. When the government says that the fuel is subsidized, how exactly is the rate regulated? I mean if a commodity actually has a price tag of Rs.80 and it is subsidized to Rs.20, who exactly has to bear the subsidy? The government or the manufacturer? And is this the process in case of decision of prices of fuels too? Forgive me if you feel it is OT, but I am now pretty confused about the whole subsidy thing!

[drmohitg]

I am accepting a lot of angry posts for this but still going to ask one genuine question. According to me any person who is buying a car is rich. Rich in the sense that he can afford to live his life in a decent manner. And ofcourse there is no definition of enough money anyways. So my query is how horrible is a 5Rs hike in the petrol prices? Every news channel on the TV is showing pictures of most petrol bunks having a km long queue. WHY? On a tank full most cars will on an average be taking in around 30Ltr which amounts to a difference of rs 150 in total. Is all that headache really worth it?

[AvinashKeezh]

Subsidies are "PAID" by the tax that we pay.
Why do we end up paying more than 40-50% of the price of the fuel as tax apart from the other taxes. Fuel needs to be taxed just as any other commodity, and no subsidy provided.

[LithiumSunset]

Originally Posted by drmohitg

... a difference of rs 150 in total. Is all that headache really worth it?

To tell you the truth, its not worth it, but you cant help catching the 'bhagte chor ki langoti' syndrome!

When I 'caught' in the evening news today, I kept ruing the fact that I didn't 'fill-er-up' yesterday and "now the morons would have lined up..." but since you put it the way it is, I figured it is not worth it!

Then I consoled myself and remembered that I do drive the CNG variant! :-)

[bluevolt]

Originally Posted by libranof1987

Well, if you want to fill your cars up, better hurry. As expected, all the pumps are lined up with vehicles. You'd burn more fuel idling than what you'd save by filling before the hike!

Refueled both the cars and we saved 300 Rupees total. Well its not much but still we should try to save as much as possible. Didn't refueled Karizma as I am not using the bike due to summer season. I was lucky as there was no queue at petrol pump but dad had to wait for around 10 min to get the petrol filled.

I really don't know the theories regarding the fuel prices but what I know is that in 2008 when crude oil prices were around $ 130-140 per barrel, still the price was around 45-50 INR per liter and now prices are around $ 100-105 and the price is 64 here in Delhi/Haryana. I hardly remember when they reduced the prices.

[Sheel]

No body would stop using his Car. The hoopla will die down in a 2-3 days max and everybody shall go around minding their business.

I don't think we can do much anyways. No point cribbing. Enjoy your drive & work harder

[xander]

Hmm.. That's an interesting thought.. But what matters most is the sense of satisfaction you get when you save the 150 bucks. It is an inherent middle class attitude to save every hard earned penny which I am not against.
:-)

[cuboid]

No it is not, but do consider the fact since last june, petrol prices have shot up by close to 15 rs, which is more than 25% in bangalore. meanwhile people are still using subsidised diesel for their 20-lakh rupee SUV, or 50-lakh rupee sedan, while a guy having a M800 or nano or a moped have ever increasing fuel bill. All in the name of petrol being rich man's fuel.

Originally Posted by drmohitg

a difference of rs 150 in total. Is all that headache really worth it?

[Turbanator]

Be prepared for another hike ,,

The hike needed to make domestic rates at par with international prices was Rs. 10.50 per litre but oil companies choose to hike rates by less than half of that," the official said. "Another hike in petrol price is on cards soon," he said.


source : Petrol price to go up by Rs 5 per litre

[misquitas]

Originally Posted by drmohitg

I am accepting a lot of angry posts for this but still going to ask one genuine question. According to me any person who is buying a car is rich. Rich in the sense that he can afford to live his life in a decent manner. And ofcourse there is no definition of enough money anyways. So my query is how horrible is a 5Rs hike in the petrol prices? Every news channel on the TV is showing pictures of most petrol bunks having a km long queue. WHY? On a tank full most cars will on an average be taking in around 30Ltr which amounts to a difference of rs 150 in total. Is all that headache really worth it?

You seem to be missing the larger picture. In 2007, 30 litres of petrol would have cost me Rs 1331.4, going by the then rate of Rs 44.38 per litre of petrol in Panjim. Now, the same 30 litres is priced at Rs 1929.6, at the present rate of Rs 64.32. This works out to a difference of Rs 598.2 for every 30 litres I fill in the tank. It may not be a headache for you, but it certainly is for me.

Also, please consider the price hikes of petrol and diesel in the last four years. The price of petrol in Panjim has risen from Rs 44.38 in April 19, 2007 to Rs 64.32 from May 15, a difference of Rs 19.94 per litre in the last four years.

In contrast, the price of diesel in Panjim has risen from Rs 33.2 in April 19, 2007 to its current price of Rs 40.35, a difference of barely Rs 7.15 in four years.

[drmohitg]

I totally agree that there should be some law to tax diesel vehicles. Because with the price difference increasing substantially more and more people will start going for diesel vehicles. But apart from that my query was more on the lines of how bad is a 500-600 rs difference in your monthly fuel bills considering you drive a lot and get your tank filled up 3-4 times a month. A large pizza costs that much money these days and coke is extra .

Disclaimer: I am in no ways trying to act richi rich here. Thats not the intention at all. I was just discussing this with my dad while having dinner as he was thinking of buying a diesel car on an emergency basis in exchange for his NHC given the constant hikes. Thats when I realised that the monthly difference in your fuel bill is not exactly an obscene amount of money.

What I gather from most people's views is that its not the extra money thats troubling. Its the fact that diesel prices aren't increased.

[Fornax]

Blame Socialism!

U.S. Retail Gasoline Prices

The *Free* price of gasoline should be about +/- 5% of $1.14 at its' worse. Indian Government buys crude at much cheaper rate that the NYMEX LSCO price we all hear about - somewhere around 5-10% cheaper!

But, like every other inflationary commodity, it then subsidises this purchase price, but then state governments add taxes resulting in petrol price shooting over the moon; about ~20% above the selling price in a free market. Reason being, the ultra-rich social stratum - Petrol Car Owners - are rich enough and can take it, but the acutely inflation sensitive ones - Diesel Vehicle Owners - are given a free ride at governments' expense.

Blame the petrol deregulation, or policies written for the 1950s, somethings' terribly amiss in this country's economic & social policy w.r.t. the two fuels - Petrol v/s Diesel.

[LithiumSunset]

Originally Posted by LithiumSunset

To tell you the truth, its not worth it, but you cant help catching the 'bhagte chor ki langoti' syndrome!

When I 'caught' in the evening news today, I kept ruing the fact that I didn't 'fill-er-up' yesterday and "now the morons would have lined up..." but since you put it the way it is, I figured it is not worth it!

Then I consoled myself and remembered that I do drive the CNG variant! :-)

I totally forgot to mention that Diesel prices continue to remain untouched and that is really sad. I try to ignore this, considering that when I did all that fangled spreadsheet analysis, I convinced myself that our leaders will start to see and administer us the real cost of diesel. The point is every time they don't touch Diesel prices, they mark up petrol even more to compensate, thereby driving more and more people into the oil burner's fold!

Its all convoluted and difficult to not make selfish decisions!

[vina]

Originally Posted by freakmuzik

I understand the whole thing. Ok so I have a few questions here. When the government says that the fuel is subsidized, how exactly is the rate regulated? I mean if a commodity actually has a price tag of Rs.80 and it is subsidized to Rs.20, who exactly has to bear the subsidy? The government or the manufacturer? And is this the process in case of decision of prices of fuels too? Forgive me if you feel it is OT, but I am now pretty confused about the whole subsidy thing!

There used to be an oil pool under the administered price mechanism. That went away with deregulation.

Now what the govt. does is it "suggests" the oil marketing companies a particular price under the promise of making up the difference later (from govt.'s own funds) - PSUs have to agree because govt. is the supermajority stake holder. It is not clear whether IOCL stock holders can take govt. to the court over al this non sense, but the govt. in past 2 yrs has never cleared its dues. The subsidy, when paid, comes from taxes collected by central govt. (this includes taxes on petroleum)

It is not that the PSUs don't benefit - the subsidy for example is not provided to Reliance and Shell, and if the same per-liter subisdy is provided then Reliance may actually be able to undercut the prices of the PSUs - that will be catastrophic to a lot of them - so they make noises in public.

[tsk1979]

I did not know diesel was heavily subsidized. AFAIK, its lightly subsidized. Even Petrol is subsidized.
So, why is diesel cheaper.
ITs simple, diesel is not taxed heavily.

So even after removing subsidy, it will be just 5rs dearer.

Last but not the least, if diesel is taxed heavily, prices of everything will go up.