[apachelongbow]

I believe the government has explained sometime back about how it is maintaining a cushion of sorts, to prevent a sharp spike in fuel price, because they are anticipating that crude prices will eventually rise. So even though crude price has dropped, the government has increased surcharge on the refined fuels and ensured that price drop is not equal to the drop of crude.
I believe it is a mature idea, especially with diesel because any sharp drop in price of diesel will not lower transport costs (profit will be taken by the transporters) however a sharp spike in prices will automatically get passed to the common man leading to large scale rise in inflation and food prices.
Also as pointed out by other members, a sudden drop in fuel prices will make lot of people drive more, or buy cars and bikes, leading to congestion and traffic.

[sgiitk]

Buffering is a good idea. The aam janta will crib as soon as price goes up by even ₹1. This esp at election time can be politically bad. If the Excise hike is only for buffering then fine, else we will end up paying through VAT hikes by most states, and so will lose money in fuels in any case.

[saurabhkum]

The ATF price in January 2014 was 76.24 Per Liter which is now 46.51, a drop of almost 30 Rs or 40%. While that of Petrol the price was 71.57 in Jan 2014 and now it's 58.95 Rs, a drop of 13 Rs or approx 20%. Now can some one share the thought process involved in this differential treatment . It's just that the voice of common man is not vocal enough for this Govt?
I would have been happier if the same treatment would have applied for all the petroleum prices. The whole talks of vendors not passing the price benefit also doesn't hold good as none of the airline have reported a cut in the fares. Also if Govt themselves are not ready to pass the benefit then why to put an imaginary hypothesis on the same not being done by transporters.

[lurker]

Originally Posted by khoj

They can reduce all they want since they really do not have actual petrol to sell well not much of it anyways

they do have a circular debt problem. There was a petroleum shortage for a few days. When people protested, they released petroleum stocks and there is no more shortage.

Pakistan consumes 4 oil tankers worth of petroleum every month. In January they just received 1 oil tanker. So they had a shortage. And they released oil to market from reserves. They may have planned to refill oil reserves with cheaper petroleum as price fell.

But even they are not selling petrol at a loss by any yardstick.

[el lobo 6061]

Originally Posted by civic-sense

When onion prices fall to Rs 2 per kg, would you want the govt to step in and inflate the price so that every tom, dick and harry do not start eating onions?

Onion and petroleum products are two different things and we rather not compare prices between the two. One can live without using a car but not without food. Also since onion is grown in India, its prices can be controlled whereas crude is imported and Government cannot control it.

Originally Posted by civic-sense

One should use short-term benefits, cos in the long term we would all be dead.

How do you define this short term benefit? How long do you think would low crude prices last. A year maybe 2. In this period of time how much kilometers would you clock given low fuel prices. What after that?

When prices starts dropping people hold onto their savings thinking tomorrow prices would be even lower to purchase it.

Also if we work by short term benefits it wouldn't take India long to be another Greece. So what Government is doing is right in the interest of Nation and people at large. It takes a lot of guts to do whats right and not what people want.

I rest my case.

[1lokesh]

Originally Posted by saurabhkum

The ATF price in January 2014 was 76.24 Per Liter which is now 46.51, a drop of almost 30 Rs or 40%. While that of Petrol the price was 71.57 in Jan 2014 and now it's 58.95 Rs, a drop of 13 Rs or approx 20%. Now can some one share the thought process involved in this differential treatment . It's just that the voice of common man is not vocal enough for this Govt?
I would have been happier if the same treatment would have applied for all the petroleum prices. The whole talks of vendors not passing the price benefit also doesn't hold good as none of the airline have reported a cut in the fares. Also if Govt themselves are not ready to pass the benefit then why to put an imaginary hypothesis on the same not being done by transporters.

Rs 58.95 ? I paid Rs 66/Ltr last week!
I was a staunch supporter of Modi Govt till a couple of months back. But since this whole issue of buffering up Petrol prices even after crude hitting lifetime low is a real joke with common man. Why is aviation fuel getting all the love? Which common man travels in planes and choppers? He/she drives a modest 2-wheeler, travels in BEST buses and auto rickshaws which in turn DO NOT run on Aviation fuel Yes, Adanis, Ambanis and high flying executives though will stand benefited. This also somehow seems to be a sort of indirect support to resurrect spicejet (remember its outstanding fuel bills?) Overall the air tickets prices also haven't come down.

This whole talk of not decreasing the petrol price since it will lead to people buying more cars/2-wheelers and thus resulting in jams is pure idiocy. Will they stop supplies of sugar because every 3rd person nowadays runs a risk of diabetes? Will they penalize or put heavier duties on industries and diesel vehicle since they contribute to pollution and thereof lungs disease?

I think our FM and PM are either trying to royally fool people or have real bad advisors!

So much for Achche Din!

[civic-sense]

Originally Posted by el lobo 6061

Onion and petroleum products are two different things and we rather not compare prices between the two. One can live without using a car but not without food. Also since onion is grown in India, its prices can be controlled whereas crude is imported and Government cannot control it.

That's right. So when the govt do not fix the price of something so essential as onion or tomato, why do they have to do for fuel?

Originally Posted by el lobo 6061

How do you define this short term benefit? How long do you think would low crude prices last. A year maybe 2. In this period of time how much kilometers would you clock given low fuel prices. What after that?

When prices starts dropping people hold onto their savings thinking tomorrow prices would be even lower to purchase it.

Also if we work by short term benefits it wouldn't take India long to be another Greece. So what Government is doing is right in the interest of Nation and people at large. It takes a lot of guts to do whats right and not what people want.

I rest my case.

I do not want the govt to take my money, keep it and then give it back when I have a shortage. I can manage my money myself. It has been observed that governments are not that efficient in handling other people's money.

In short, i don't want the govt to buy me a cushion with my own money, I can do that myself.

[ramzsys]

Originally Posted by civic-sense

Basically, I'd like it if the market is left to fend for itself. Govt should stay away.

Either of that is not going to happen.

With every price hike of diesel, private inter-city operators(why, even BMTC of Bangalore) hiked prices for the tickets. Same story with restaurants, transport charges, auto charges as well. But they haven't dropped it down with the price drop, had they? then what is the use of crude price drop for the (real) common man, say the BMTC (non AC) commuter?

The government is filling it's coffers at the opportune time; if not this source then like the imprudent years of yore we have to either borrow or print excess money to fund for it's spending that will affect inflation which in turn will affect us directly.

[civic-sense]

Originally Posted by ramzsys

Either of that is not going to happen.

With every price hike of diesel, private inter-city operators(why, even BMTC of Bangalore) hiked prices for the tickets. Same story with restaurants, transport charges, auto charges as well. But they haven't dropped it down with the price drop, had they? then what is the use of crude price drop for the (real) common man, say the BMTC (non AC) commuter?

Prices correct, not necessarily fall, in a free economy. To understand that you should factor in inflation into the equation. No prices can remain inflated in a free market.

The government is filling it's coffers at the opportune time; if not this source then like the imprudent years of yore we have to either borrow or print excess money to fund for it's spending that will affect inflation which in turn will affect us directly.

I know some people don't believe in free markets, so I wouldn't present it before you as a panache for all ills. But I wonder whether it was a socialist's market that these guys promised us. And I wonder why the same prajas who ushered them in with fervour is now batting for socialist policies? The power of politics?

[saurabhkum]

Originally Posted by civic-sense

I know some people don't believe in free markets, so I wouldn't present it before you as a panache for all ills. But I wonder whether it was a socialist's market that these guys promised us. And I wonder why the same prajas who ushered them in with fervour is now batting for socialist policies? The power of politics?

Bang On! There is always a belief that balance of power is very important for benefit of all. Today the Govt is in absolute power and it is also said the absolute power always corrupts. The same thing is happening currently. Don't get me wrong on the point of corruption , corruption is different from bribery and has far more ill effect. Bribery is a very small sub-set of corruption.
Changing the pricing of ATF was the last eye opener I believe. Do you want me to believe that if today crude rises to same level as it was one year back then will the prices be the same as last year ? Answer is a big no , it will be far higher than what we used to pay. At that time they will give the excuse that prices are de-regulated and are based on Crude Prices and Rs Vs Dollar rate.

I've no problem in paying the Govt but then they should have courage to come in-front and say that they have again regulated the price and accept the fact that they had no clue on how to plan for the budget as they failed in generating revenues and had no option but to commit this day light robbery. No at least come out and accept these mistakes, we Indians anyways are very great at heart we will forgive you.

[poloman]

I have been a supporter of the current pricing policy. I tried to illustrate the same in last few pages. But now even I feel the Govt is losing the perception battle very badly having reduced the ATF prices so drastically. The political cost can be huge for such decisions unless they properly explain the logic to people. People may still grin and bear this for the moment, but If the oil companies tries to raise the fuel prices when the crude prices climb, the backlash will be severe. As some one pointed out the current advisers of PM and FM may lead them to 2004 like downfall.

[SchumiFan]

The users of ATF are very limited when compared to Petrol/Diesel. Any large scale movements in those pricing will affect the markets drastically.

It is good of the Government to try and make some money when the crude oil prices are low but I think they should also ensure some monitoring to bring down the prices of transport and other services that have increased their rates when the fuel prices shot up.

I have not seen any deduction in the pricing even in the private sectors in transport or food costs (talking about private companies here). That is disappointing to say the least when they are the first to increase the costs when the prices shoot up.

[sgiitk]

Remember airlines are also allowed to import ATF. So there is a small ceiling in place. Of course the cost of importing will have a huge transportation element.

[vvrchandra]

Just saw news scrolling that petrol and diesel prices have been reduced by Rs 2.42 and
Rs 2.25 per litre respectively.

[Vitalstatistiks]

Originally Posted by vvrchandra

Just saw news scrolling that petrol and diesel prices have been reduced by Rs 2.42 and
Rs 2.25 per litre respectively.

Those rates include state levies too and are for Delhi (http://www.business-standard.com/art...0300971_1.html)

Expect higher reduction for states like Maharashtra and Karnataka.