[a4anurag]

Originally Posted by JoseVijay

As per TOI fuel prices may increase in the state of Telangana

Not again. This move is being done to increase Tax collection in the state (Newly formed) ao they need money.

What a way to pay tax to the state government. Hope this move isn't approved and passed.

[RSR]

Although the central government (and those in some states) are indulging in dirty tricks by not passing on the benefit of falling international crude prices to end consumers, there is some fabulous news related to crude oil prices at the international level.

First, the fall in international prices of crude is continuing! Brent is down to five-and-a-half-year lows as it comes down to the $ 56 per barrel mark. God willing, this hugely welcome drop will continue at the same pace, until the price of international crude oil hits realistic levels of $ 35 ~ $ 40 per barrel - even this is enough to generate sufficient profits for oil producers (at least the ones who extract from conventional sources of oil) as well as middlemen.

Price of crude oil (WTI) over the last ten years (Source - NASDAQ):

U.S. crude and Brent futures dropped to fresh 5-1/2-year lows on Monday as worries about a surplus of global supplies amid weak demand continued to drag on oil.

http://uk.reuters.com/article/2015/0...0KE06T20150105

Second, there could be an earth shattering occurrence as a result of the steep (and much delayed) fall in international crude prices. Although this news hasn't made it to the mainstream media yet, it is louder than a whisper now, and getting louder and louder by the day.

There is no doubt that the rapid fall in crude oil prices has benefitted humankind tremendously. The oil importing countries of the Third World and their long suffering citizens are the biggest financial beneficiaries of this. Even more importantly, falling crude prices have helped to tighten the screws on certain diabolical, mass-murdering regimes that were using the windfall profits from crude oil & natural gas to go on a satanic spree of slaughtering innocents in the Middle-East & Eurasia and spreading terror and destruction throughout the world. The fall in prices comes as an Almighty God sent gift to humankind to limit the human butchering carried out by such hated, bloodthirsty, criminal gangs of tyrannical mass-murderers.

Country after country is gaining tremendously from the fall in crude prices. The GDPs of several oil-importing Third World countries have received a boost as a result of this, and many of their governments are on the verge of wiping out deficits, thanks to the burden of unrealistically high crude prices easing up now. For instance, take our "very friendly" neighbour, the PRC. The ones who run that country are easily one of the biggest beneficiaries. They are happily publicising it. And what's more, they are hinting at an earth shattering event - the possible break up of the notorious oil cartel called OPEC!

I normally avoid posting or quoting from certain kinds of media outlets, but this is simply too important to be given a miss. Boy, oh boy, if the breakup of the cartel eventually happens, the entire world would be so much better off!

Competition among producers favors buyers

Just because a story gets a lot of press coverage does not mean that the broader public is aware of it. An example of this is the possibility that economic pains stemming from falling oil prices could lead to the breakup of the Organization of Petroleum Exporting Countries (OPEC).

http://www.ecns.cn/business/2015/01-05/149317.shtml

Third, as if possible dissolution of the oil cartel was not enough, we now have more competition! Whether the OPEC members stay together or decide to effectively break up the cartel, they are going to face more competition now. And that is in the form of the USA, which has decided to lift the ban on crude oil exports!

More competition is always welcome in any field. As they say, God bless competition!

The Obama administration has opened a new front in the global battle for oil market share, effectively clearing the way for the shipment of as much as a million barrels per day of ultra-light US crude to the rest of the world.

The Department of Commerce last week ended a year-long silence on a contentious, four-decade ban on oil exports.

http://www.independent.ie/business/w...-30881247.html

[jaaz]

Originally Posted by 9tMax

I was also under the same impression, that Bangalore, followed closely by Hyderabad, has the highest petrol prices in India.

BHPians from those cities - can you confirm, to give us a little solace?

hmmm. Thanks for the information. It means Taxes have changed in the last 5 years. Mumbai was always 3-4 rupees less than Bangalore, but now it's more than Bangalore. In Bangalore, it's Rs. 67.37.

Srinagar - Kashmir, I can understand the Price, because of Transportation etc., etc., But cities like Mumbai, Kolkatta? Kolkatta has One of the Cheapest Standard of Living Cost..

And there's a new Post by @JoseVijay that Hyderabad may see an increase again ?? Double Whammy.

[jaaz]

Originally Posted by RSR

Although the central government are indulging in dirty tricks by not passing on the benefit. they are hinting at an earth shattering event - the possible break up of the notorious oil cartel called OPEC!

I normally avoid posting or quoting from certain kinds of media outlets, but this is simply too important to be given a miss. Boy, oh boy, if the breakup of the cartel eventually happens, the entire world would be so much better off!

Good amount of Research

Well, Personally I would be more than happy to see the Prices <$10 ( I need not calculate Fuel Prices for my trip to Leh & Ladakh). But, If the prices are too low, then different formulations will start. The Cost of extracting Crude itself comes to around $15-20 per barrel. Then the other Sales & Marketing Costs. If they get a price below the Cost of Production, then there is a fear of Shutting down or delaying of New investments into Production. Little Selfish, but lot of Indians are involved in these OPEC Oil Fields.

And, I beg to differ - OPEC is completely controlled by US. So, Definitely, PRC will be happy to break that alliance. The current situation is more to do with Ukraine-Russia than with Market conditions.

If the current prices are maintained for a long time, We, Consumers should be more than happy. I mean Indian prices around Rs. 50/- should be ideal, If they stand for a long time. If the Taxes are brought back to 2013 levels, this price is possible.

[joslicx]

Originally Posted by jaaz

Can you Please explain with supporting figures. From another source, What I learnt was after the Petrol was deregulated, the Excise duty was not collected as a Percentage, but a Fixed amount or in terms of Rupee Calculations. As a layman, my figures are simple - Crude Prices down by >50%, but Fuel Price reduced <15%. Where is the Rest of the Money going???

And we all know how much a Common Man receives out of every Rupee collected by the Government - I guess it's <15%

Common man is not just one man. Its all of us including those in the govt.

My original argument was about the revenues. Lets do a thought experiment.

Let us say you are in business of buying a product X from overseas and then selling it here in India. Lets say as per your business calculations you expect to sell for Rs 100 in a year. The cost price for the product (including all taxes etc) is Rs 40. Also there is a cost of Rs 10 to transport this product to various sellers all over India. Furthermore there is Rs 25 to be paid to all your employees as their salaries/bonuses/expenses. And there is another Rs. 10 that has to go towards the loan payment that you took to establish the business in the first place. So that leaves you with profit of Rs 15 out of which Rs 5 is paid to your shareholders as dividend and Rs 10 is earmarked for expansion next year (so that you can do more business next year which means growth). Fair enough? That is good business.

Now consider the prices crash so that you buy the product for 40% less ~ for Rs 24 only. If you sell for Rs 60 (instead of 100) lets look at the maths. Transport cost of 10 remains same. Employee costs of 25 remain same. Rs 10 loan costs remain same. So your total expenses = 24 + 10 + 25 + 10 = Rs 70. Earnings on the other hand Rs 60 only! Net result - disaster! Ruin! If you still wanted same Rs 15 profit you will have to sell for Rs 85 which means only 15% reduction in selling price.

Now you could argue to make Rs 100 you could import 40% more but you could also argue if there will be 40% more demand suddenly / environmental impact of more consumption / impact on CAD, rupee value etc.

Petroleum products were always cross subsidizing each other and govt took a huge tab when crude prices had bloated to $100+ levels. So basically you do not have a valid reference value in the first place to say if the current price is down or up and by what percentage! Deregulation right now just means its not subsidized anymore (it wont show up in the budget or no budgetary allocation for diesel/petrol. For reference Diesel subsidies alone for last 8 years were about Rs 4 Lac crore!!! This is gone now!)

[saurabhkum]

Crude continues it's downward trend. US crude is below 49$ while Brent is around 53$. I hope now we get some benefits passed on to common public. Just a prospective 1 year back ATF was selling at 76.24 Per liter as on Jan 14 and now it's 52.42 Rs per liter. A drop of more than 30%. At the same time Petrol Prices were 81.31 Rs in Mumbai which is now at around 69 Rs per liter , i.e a drop of 15%. Can't understand what is going on!!!

[sgiitk]

@saurabhkum; State Govts started hiking VAT, so centre is hiking excise instead. Even if centre does not get into the act VAT will not allow us to get the benefits. This alone is enough why Petroleum should be under GST!!

[lurker]

the only good thing from all this is atleast people get the idea why I was saying from Day 1 that oil deregulation will be nothing but a scam.

You can never truly deregulate something that takes away bulk of your foreign exchange and generates maximum assured revenue. This is the source of power and something like this can never be left to the markets because when it peaks it can destroy economies and when it touches new lows it can fund all kinds of shady schemes and enrich so many shady characters.

[RSR]

Originally Posted by lurker

the only good thing from all this is atleast people get the idea why I was saying from Day 1 that oil deregulation will be nothing but a scam.

Spot on, lurker! You had got it correct right from the beginning with your sarcasm loaded comments whenever a retail price drop was expected.

Yes, whichever government it is, de-regulation of petrol & diesel prices is nothing but a DRINO or De-Regulation In Name Only.

Now, Drino happens to be the name of a river in Albania & Greece. For the government, DRINO (of fuel prices) is indeed like a financial river that maintains a constant and steady flow of money into its coffers (a bottomless & unaccountable pit). They would not want to stop the flow of the river at any cost.

Alternatively, according to urbandictionary.com, the word drino has another meaning (colloquially). And it is, a blemish on the skin that is created by an unknown source. It is similar to a pimple, but is unpoppable, and is part of a group. For end consumers, DRINO is indeed turning out to be a permanent, unpoppable and ugly blemish in terms of finances.

[longhorn]

Crude is now retailing at under 50$ to the barrel. This is the lowest price of crude since 2009. Just waiting to know by how much the excise duty is going to get hiked at the middle of this month.

[kiku007]

Originally Posted by longhorn

Crude is now retailing at under 50$ to the barrel. This is the lowest price of crude since 2009. Just waiting to know by how much the excise duty is going to get hiked at the middle of this month.

To a point where the total Tax component of a litre of petrol is more than 50%?

What's the current Central+State Tax % in a litre of petrol now?

[pgsagar]

Originally Posted by lurker

the only good thing from all this is atleast people get the idea why I was saying from Day 1 that oil deregulation will be nothing but a scam.

You can never truly deregulate something that takes away bulk of your foreign exchange and generates maximum assured revenue. This is the source of power and something like this can never be left to the markets because when it peaks it can destroy economies and when it touches new lows it can fund all kinds of shady schemes and enrich so many shady characters.

Can't Govt. be dragged to court over this extortion? Yes, it is not taxation but extortion. Can't a PIL be filed against Govt.? Can't RTI query be filed asking Govt. to disclose how much tax centre and state govt.'s earn on each litre of petrol/diesel? Some kind of white paper where all their accounts are laid bare for all to see? It is about time this happened. Until then the loot and hoodwinking will continue. And the whole farce is called deregulation.

[sgiitk]

With Brent touching $50.xx overnight there is some hope on the 17th. One thing which i bugging me is that there may be a better chance of the Excise being rolled back, but state VAT .... Now Shale 'Fracters' are cribbing about uneconomic oil prices , so one Saudi objective is achieved. I expect the ₹ to hit the 64 level wrt to the $ and not much downside to Brent so maybe we are near or at the bottom.

[lurker]

Originally Posted by pgsagar

Can't Govt. be dragged to court over this extortion? Yes, it is not taxation but extortion. Can't a PIL be filed against Govt.? Can't RTI query be filed asking Govt. to disclose how much tax centre and state govt.'s earn on each litre of petrol/diesel? Some kind of white paper where all their accounts are laid bare for all to see? It is about time this happened. Until then the loot and hoodwinking will continue. And the whole farce is called deregulation.

firstly there are some facts about oil that need to be acknowledged by all before this debate can even begin:

1. deregulation as practised in USA can never be implemented in India. That is because USA is a unnatural market. USA used it's military might to enforce it's economic currency on both oil seller and buyers. This is a kind of continuation of british raj economic imperialism but on a far larger scale. So USA can price it's petrol at $1 or $.50cents. It really doesn't make any economic difference to it.

Think of it as India buying oil in Rupees. Then oil in India would be truly deregulated.

2. Govt of India has to cough up dollars for oil import. Now dollars can only be gained by trading with USA. So for buying oil in international market, trading with a third party like USA is important. Do you get the weirdness of this market ?? So neither can Govt of India buy all the oil it needs because it needs to pay for this crap in dollars but it needs to trade with another country to cover for this trade.


Only gainer in this entire arrangement is USA. Because it can print endless dollars and can have unrestrained consumption on basis of trade with countries dependent upon oil imports and it can easily finance whatever budget deficit it has because of this oil trade mechanism imposed on world.

Govt of India can thus as a result never price oil fairly or freely. Neither can any of the other govts in the world that need to import oil. So thus I said from Day 1 that oil can never be deregulated. It is more like a chain shackled onto the legs of third world countries to keep them perpetually in deficit.

[AshBabu]

Originally Posted by lurker

Only gainer in this entire arrangement is USA. Because it can print endless dollars and can have unrestrained consumption on basis of trade with countries dependent upon oil imports and it can easily finance whatever budget deficit it has because of this oil trade mechanism imposed on world.

Govt of India can thus as a result never price oil fairly or freely. Neither can any of the other govts in the world that need to import oil. So thus I said from Day 1 that oil can never be deregulated. It is more like a chain shackled onto the legs of third world countries to keep them perpetually in deficit.

It is not true that USA can print dollar endless and buy anything it likes. There are checks and balances. That is the reason Dollar loses its value against other currencies many time. It is has been accepted practice to use dollar across the world may be because of US economy was strong a century back. Recent years Euro has also gained acceptance widely.

It is true that India has to shell out dollars to buy oil. There was an agreement with Iran to buy oil in Rs. Not sure it is working now due to politics.

The excise duty hike are shams done by our government on our people. The Government has no capacity to control its non-planned expenditure nor political will to cut down all unwanted subsidies. Sure in a country like ours, there is need for subsidies but not for all. For example in India Agricultural income is not taxed. The beneficiaries are not farmers but land sharks. So the revenue for government is limited. Also tax receipt falling down last year, the government has no option to milk the oil cow. If they are not going to achieve fiscal deficit target, then it will impact on low cost fund borrowing and also the economy. So easy way for them is to hike excise tax on oil.