[akhilesh]

Originally Posted by drmohitg

They are also mulling over cancelling the subsidy on LPG. I feel its the right decision. In the short term it pinches all of us. But may be in the long run it will be good for the economy as a whole to do away with subsidies. And yes I think GTO might have a point here as the oil companies will look to clear away there losses accumulated over so many years.

BTW I am pretty sure that making this govt fall and electing BJP or a third front is not going to serve any good. Only till these guys are in opposition they support the common man. Once a part of the govt they change there colours in no time.

I am sorry but I don't think inflation was so big a problem during BJP days. Keeping aside the problems its the response from the government which is disgusting - "we dont have a magic wand"

[simplyself]

The reason this time, as reported yesterday (15.09) was the rupee exchange rate. Today it is the high rate of crude and the losses the OMCs have to bear.

The LPG rate hike move is okay, I think. The article says the Government is mulling over the issue and may favour capping the number of cylinders an user can buy at subsidized rate. The current talk is it will restrict the number of cylinders to 4 per year at the subsidized rate. Beyond that number, one may have to buy it at full market price, which is now at about Rs.800/-. Ofcourse, they are deciding the criteria by which the govt will differentiate between the customers. Those who own a car / house, file IT returns are limited to 4 cylinders per year.

The petrol hike is Rs.3.48 at pump.

Aligning the fuel prices to international crude prices should be a right decision.

However, there are different figures quoted by different newspapers about the quantum of the losses suffered. Worse, there are two different figures quoted in the same newspaper in different articles. Why not publish the crude price and how it translate into domestic prices every week? That way, atleast the general public get convinced.

[NPV]

Originally Posted by tosathyas

Delhi's retail Price is ₹ 66.84, Margin - ₹ 9;
Mumbai's retail Price is ₹ 71.76, Margin - ₹ 13
Kolkata's retail Price is ₹ 71.15, Margin - ₹ 13
Chennai's retail Price is ₹ 70.64, Margin - ₹ 12

As usual Bangalore leads the race, not in a good way for our wallets, though
Filled up the car with Petrol this morning in Bangalore and it was Rs.74.81 a litre (yes, only 19 paise short of Rs.75 !)

Our government in the name of controlling inflation is using petrol price hikes as a way to offset the Diesel subsidy which is really unfair.

The government has so many parameters with which they can turn the market topsy-turvy. For example, the huge increase in petrol prices over last 2-3 years has now increased the demand and sales of Diesel cars. I suspect that in 2-3 years time, the reverse will happen and they will bring the petrol prices down causing another shift in demand. In effect they create a cycle of market shift from one side to the other. This is simply a way to manipulate the market so how is the government different from stock market scamsters who artificially hike prices of certain stocks ?

Sorry am just thinking out loud, not an expert in these matters.

[m8002?]

Originally Posted by simplyself

The LPG rate hike move is okay, I think. The article says the Government is mulling over the issue and may favour capping the number of cylinders an user can buy at subsidized rate. The current talk is it will restrict the number of cylinders to 4 per year at the subsidized rate. Beyond that number, one may have to buy it at full market price, which is now at about Rs.800/-. Ofcourse, they are deciding the criteria by which the govt will differentiate between the customers. Those who own a car / house, file IT returns are limited to 4 cylinders per year.

.

I thought the number 4 is universal for all subscribers. I read somewhere ( i think rediff ) that number 4 was arrived after taking into account the consumption pattern of BPL families.

Only thing good about this is it will totally eliminate black market for LPG.

[fiat_tarun]

The rupee has depreciated only in the last fortnight or so, and these oil companies claim they are losing xx crore a day.. Since when did they start working on JIT inventory ?? They always have a 45-60 day stock with them (minimum). There has been no increase in refining costs / processing costs, etc.

Another thing is, if petrol is really de-controlled, how is that all three oil marketing companies increase prices by the same amount (down to the very paisa).. ?? Pure cartelisation if you ask me.

I really don't know where this is going, but the goverment really need to get a fuel pricing policy in place - Something like petrol prices will be revised on the 1st & 15th of every month based on global cues (up or down).

[bullboy]

Another news from the newspaper that cooking gas price will also go up and the government is discussing how to kill the citizens with that.
The oil companies demanded a 5-6 rs hike for diesel but was denied by the govt.
About 45% of the petrol prices are state and central govt taxes. Where is this cash going ?
Roads are pot holed and newly constructed ones are tolled.So why taxing fuel if infrastructure usage also need to be paid ? For politicians to enjoy their life?
Auto rickshaw fares will go up. Now a days i'm afarid to hire an auto.If dont give the money he demands be prepared to hear all sorts of bad words from his mouth.damn..

Couple of months back crude was around $80-90 ,but did they reduce the price ? No .why? The reason told that the price decrease was not stable. These people should be shot.

Basically the govt and oil companies will not pass the benefit to poor citizens if the crude prices are low but is happy to increase even for a slight increase in international prices .Why ?

[filcord]

All indignation aside, let's put things in perspective here.

Subsidising fuel price is nothing less than asking the tax-payer to pay for car and bike owners. The subsidies have to go, not only for petrol but also for diesel and gas.

What we don't realise is that there is a large component of customs duties, local taxes, octroi, etc. on fuel which leave plenty of room for reduction, so that prices could remain the same, but the oil company burden could reduce. This is an avenue that the Central Government could, and should explore actively.

The huge subsidy in kerosene is a bonanza for the adulteration mafia, using kerosene to mix with higher priced diesel and petrol.

The subsidy in diesel is largely promoting sale of diesel-fuel cars and SUVs.

The abolition of subsidies removes a lot of avenues for corruption in the system, reduces paperwork and man-hours in their maintenance, and forces economic behaviour based on the real costs rather than an artificially-supported cost. Ultimately, a subsidy is not free, it is paid by us in some other form.

[simplyself]

Originally Posted by fiat_tarun

The rupee has depreciated only in the last fortnight or so, and these oil companies claim they are losing xx crore a day.. Since when did they start working on JIT inventory ?? They always have a 45-60 day stock with them (minimum). There has been no increase in refining costs / processing costs, etc.

.

Even that reasoning is spurious. Not all the crude is imported. The Crude extracted from within the country is sold to the refineries at a pre determined rates.

The loss the OMCs claim is notional. The calculation goes like this - if the crude international price is xx, add the refining costs (which are pittance anyway), transportation, overheads, margins etc and then decide on the price. Fine, but what if the domestic crude price is lower than the international price? The OMC pricing is always based on the international pricing but never mentions the domestic crude which amounts to 25 % of the crude we consume.

[bullboy]

Subsidising fuel price is nothing less than asking the tax-payer to pay for car and bike owners. The subsidies have to go, not only for petrol but also for diesel and gas.

Many companies are setting up shops in india because of the relatively low cost skilled man power.If prices are decontrolled all prices will go up .Inflation will rocket.People will demand more wages for survival and india will no longer be a cheap work force.Then why should some multinational open their manufacture unit here where there are emerging african nations and other asian nations.Our growth will be hit.

Like someone said before there should be a fair pricing policy in place.Heavy taxation of fuel should be abolished.

[Gansan]

An upshot of this, auto fares go up every time there is a fuel price hike, remain constant when prices are revised downward (rarely though), then move up again with the next increase!

[sumathindra]

A couple of weeks i spent 6k for a new cycle for my daughter. It's a 6 geared Hercules MTB, I plan to use that moving forward. Just cannot comprehend that petrol is costing 75/liter!

[Amazing]

Although most autos use CNG/ Diesel in majority of the cities, but they will hike fares even if petrol prices are hiked ( without change in diesel/ cng price)....dont know the conection here!

[maddy42]

Well where did the govt come up with the magic number of Pi = 3.14?

Sorry but time to but diesels now makes more sense.

[akj123]

Originally Posted by tosathyas

As per my understanding:

1 Barrel of Crude Oil would result in 78 Litres of Petrol.
1 Barrel of Brent Crude is around $100,
So 78 Ltrs costs $100 or ₹4500 (@ $1 = ₹ 45)
This translates into ₹ 58/ per litre.
...
Accordingly the prices should have been cheaper in Mumbai, Delhi, Chennai, followed by Kolkata, isn't it...

Please refer this slightly dated link. It gives a breakup of the taxes.
What is the real cost of petrol in India? | Asian Correspondent

As per my understanding, a barrel of crude oil is 42 gallons = 158 litres approx. With this, the cost per litre translates to Rs 33 (assuming oil barrel = $110, 1 US $ = 48 Re). Add some amount for refining and transportation.

I don't know if distance to port or refinery is a factor, biggest factor just seems to be tax.

Originally Posted by filcord

All indignation aside, let's put things in perspective here.

Subsidising fuel price is nothing less than asking the tax-payer to pay for car and bike owners. The subsidies have to go, not only for petrol but also for diesel and gas.

Completely agree - all subsidies should go, but at same time, taxes should be reasonable - not comprise 50% of the retail price, i.e., 100% tax on the original product price !

I think govt. + OMC are just trying to hoodwink people by making these subsidy statements - reality is the amount collected in tax is far greater than any subsidy element. It seems govts are dependent on this easy tax source, and not willing to reduce it.

For all their noise and fury, the opposition party ruled states have high taxes, why don't they reduce the taxes in the states they govern ?

[drmohitg]

Originally Posted by akhilesh

I am sorry but I don't think inflation was so big a problem during BJP days. Keeping aside the problems its the response from the government which is disgusting - "we dont have a magic wand"

So you are comparing 2002 with 2011? Thats not a realistic parameter to judge BJP's performance at all. Anyways lets not discuss politics here.
Yea I agree the govt's approach towards certain issues has been little arrogant. But one thing is for sure that oil companies are losing money each day. Blame it on subsidies on other stuff or taxes or whatever. The problem is that even if rupee loses its value and crude remains low, the price hike will not be rolled back as they would want to cover up there losses from previous years. Its a kind of vicious circle we consumers have got into.

Honda better get those diesel engines fast or they will again lose market share.