[blackwasp]

Adding my 2 cents. While myself feeling the pinch of rising fuel prices, the need of the hour is a drastic improvement in the public transport system and encouraging the use of CNG, electric vehicles. Let the fuel prices stay on the higher side. Otherwise we would have just far too many vehicles on our Indian roads. While the govt. is unable to control the supply of vehicles via taxes, the increasing fuel costs have definitely made a mark.

Further, I also think that diesel should have not been de-regulated for the simple reason of keeping inflation in check (at least for trucks and other non-private vehicles). Now, along with the rising fuel costs, one has to also face the increased costs of almost all goods that are transported by trucks. Sale to private vehicles can be done at a higher rate, but then again, I'm sure it won't be fool proof. So, diesel vehicles can be taxed at a higher rate assuming the average number of kms being done by a vehicle in its lifetime.

EDIT - The problem is compounded by the fact that motorists have to pay road tax, entry tax, tolls, road safety cess, and what not in the name of development and shell out more for the fuel. This frustration is easy to sympathise with as while there is money going from one's pocket, an equivalent development can't be seen.

[civic-sense]

Originally Posted by blackwasp

Adding my 2 cents. While myself feeling the pinch of rising fuel prices, the need of the hour is a drastic improvement in the public transport system and encouraging the use of CNG, electric vehicles. Let the fuel prices stay on the higher side. Otherwise we would have just far too many vehicles on our Indian roads. While the govt. is unable to control the supply of vehicles via taxes, the increasing fuel costs have definitely made a mark.

Just like artificially bringing down prices by giving subsidies is wrong, artificially inflating prices by taxing through the roof is equally wrong. Not just morally, but economically too. People wanting to pay more taxes should be provided an option to pay separately.

Further, I also think that diesel should have not been de-regulated for the simple reason of keeping inflation in check (at least for trucks and other non-private vehicles). Now, along with the rising fuel costs, one has to also face the increased costs of almost all goods that are transported by trucks. Sale to private vehicles can be done at a higher rate, but then again, I'm sure it won't be fool proof. So, diesel vehicles can be taxed at a higher rate assuming the average number of kms being done by a vehicle in its lifetime.

Actually, somebody had dispelled that myth in this very forum. I am just lazy to search, but the gist was this: A rupee hike in diesel price might inflate the price of tomato by a paisa or two, nothing more.

EDIT - The problem is compounded by the fact that motorists have to pay road tax, entry tax, tolls, road safety cess, and what not in the name of development and shell out more for the fuel. This frustration is easy to sympathise with as while there is money going from one's pocket, an equivalent development can't be seen.

I agree, we are being taxed for just about everything. Even for stuff which the govt should not be even poking their nose in. Sadly, we lay back and accept it, and most of us are brainwashed to the point where we don't dare criticise the almighty government.

[volkman10]

Fuel prices at all time high – Petition filed in Court to bring Petrol, Diesel under GST

If petrol, diesel are brought under the GST umbrella, prices will come down to Rs 45 per liter for petrol and Rs 35 per liter for diesel.

Link

[pavanmadhini]

I have a feeling the prices will keep going up till the end of this year, and then a big drop will be announced before the big elections.

[wildsdi5530]

Originally Posted by blackwasp

one has to also face the increased costs of almost all goods that are transported by trucks. Sale to private vehicles can be done at a higher rate

The mainly affected person by rising fuel costs is the common man. In a city like Bangalore, most of the vehicles on the roads are commercial. Taxis, buses, trucks, autos, etc. will just pass on the rising costs to the customer. The personal vehicle user is the one affected by paying out of his pocket. Very few people drive or ride for fun. Most people use their vehicles for going to work or as part of their work. Some are lucky to claim TADA, but most pay out of their own pockets. That is why the high fuel taxes affect the common man.

[condor]

Btw, there was a 6.7b USD payment pending to Iran - for oil imported in 2010-2014. The whole amount not paid at all. Very possible that this payment is now being offset with the higher prices.

[Thilak29]

Some deep dive into pricing - infographic courtesy factly

[jaaz]

If everyone had followed the trend of taxing since 2014, one might've noticed that there was a contingency tax amounting to 15-20 rupees on a litre of Petrol and little less on Diesel over and above the regular taxes under the previous govt. FM, never gave the exact reason, purpose nor the percentage of taxes, but confirmed that it is for future contingencies. Gradually, this amount got reduced since the crude prices started northwards.

Well the planning was good, but now, the time has come to offset these amounts or rather cushion the domestic prices by using the reserves. If only the govt.'s intentions are good. The ET Auto Analysis posted by @ RavenAvi is very good and gives you bird's eye view of the current scenario and mainly the contribution towards govt. kitty as well as reduction of subsidies.

Now, the bad news we can't ignore. Demonetisation has taken the toll on the economy. Then unplanned and unproductive expenditure to woo the voters in different states has compounded the miseries of govt. And then the bank npa's, undetected corruption etc., etc., Hope the economy revives for good and we can all enjoy parity of fuel prices to our Income.

[avishar]

I am more worried about how dependent we are to external sources for our energy needs.

Today India's daily crude oil consumption is around 4.3 million barrels per day, up from around 2.2 million bbl/day in 2000. While growth had tapered off a bit in the middle, oil consumption is now increasing by between 7-10 % a year, in-line with our GDP growth.

We produce around 800,000 bbl/day, which, as you see, is not going to cut the mustard when faced with our energy needs.

China produces 4 million bbl/day, and imports another 8 million bbl/day. We are thus in the same, er, basket with them.

We are capable of refining our own oil. We are the 4th or the 5th largest refiner in the world. India's refining capacity is around what we import, therefore, the value addition goes into our economy.

We don't have much oil. We have around 750 million tonnes of proven oil reserves in India. If, hypothetically, we used our own oil reserves to entirely meet our own consumption, we would dry our country's tanks in 2 and half years!

Proven global oil reserves are around 1700 billion barrels, enough to run the world for 50 years at our present rate of consumption. However, it is widely accepted that there are many billions more of untapped oil reserves which can be exploited, should the price of oil reach high enough to allow to extract the more difficult to reach oil. Also, global consumption is not going to remain at current levels, and is expected to start falling after a decade or two, thanks to reduction in demand from developed countries like USA, EU and Japan.

Global oil consumption has inched along, rising from 89 million bbl/day in 2013 to 98 bbl/day in 2017, a growth rate of 2.5 % per year.

The world's largest producers of oil are anyone between Russia, Saudi Arabia and USA (Yes USA!). All three produce around 10 million bbl/day, with USA - the world's largest consumer of oil - meeting almost half of its needs from its own fields. And who is USA's biggest supplier? It's pal Canada! No more 1973 oil shock for Big Brother.

Unlike us.

Majority of our oil imports come from three countries.

Iraq, Iran and Saudi. Not exactly the most dependable bunch, right? All three are part of OPEC, but these three are our biggest suppliers. And ever since oil prices went into a free-fall couple of years back, OPEC has been tightening the supply-line to beef up prices.

Russia is also going to keep an eye on its production levels, and is not going to increase production anytime soon, gleeful that the prices have finally shored up and it can finally restart its stalling economy.

Other than OPEC keeping production levels constant, the on and off sanctions against Iran and Venezuela's descend into an absolute basket case has hurt oil production. Venezuela, incidentally, sits on the world's largest oil reserve.

So, the point where come back to is, what happens to us? We are not only ENTIRELY dependent on other countries for oil needs and literally, our economical growth; our suppliers are also fractious, with our relationship with them and their relationship with the rest of the world affected by wars, geopolitical strategy and sanctions. Let us hope we do not have an oil shock of our own. As we can see, we pay a lot for oil as a percent of our per-capita income and our economy's resilience against price increases is low.

[sandeepmohan]

Everyone is in on this fuel price rise, scam or whatever you want to call it.

It has been a year I moved to New Zealand. When I got here, the cost for gas was $1.88/liter. It is now up to $2.29. A 22% increase in 1 year! Prediction suggests we will be paying $3/liter in 6 months time. This is scary. Diesel has gone up to $1.69. Was around $1.39 when I got here. Not very different from India if you see the trend in increase.

Diesel owners also have to pay some additional yearly tax to the government. It is like the government saying;

You know what, you pay us this extra money every year and we're okay if you pollute a little more. Then again, diesel cars are few in these parts.

[humyum]

Originally Posted by sandeepmohan

Everyone is in on this fuel price rise, scam or whatever you want to call it.

It has been a year I moved to New Zealand. When I got here, the cost for gas was $1.88/liter. It is now up to $2.29. A 22% increase in 1 year! Prediction suggests we will be paying $3/liter in 6 months time. This is scary. Diesel has gone up to $1.69. Was around $1.39 when I got here. Not very different from India if you see the trend in increase.

Diesel owners also have to pay some additional yearly tax to the government. It is like the government saying;

You know what, you pay us this extra money every year and we're okay if you pollute a little more. Then again, diesel cars are few in these parts.

But look at the per capita income of NZ vs Per capital income of India? India is 6690 Dollars a year, NZ is 38000 dollars a year.

Government here has increased the taxes 150% since it came into power, when the crude was going down, the excise kept going up, now when the the crude is going up, the excise is not going down!

[Stratosphere]

I see many people here talking about bringing fuel under the GST umbrella.

While I agree with the logic, I’m also familiar with the working of our governments.



Let’s assume they bring petrol under the 28% GST slab. Everyone happy? No !

The first thing they do is slap on a huge amount of cess on it, in one name or the other to keep it at the same price level. Hence, no change in price while increasing confusion regarding taxation. IIRC, a minister gave this explanation as the reason for not getting fuel under GST.



What we need here is a wholesome approach to reduce our dependence on foreign oil from partners who have high leverage over oil. India is not a small nation by any measure and can use an arsenal of measures at its disposal for getting what it wants. Countries playing the export game can be hurt by playing with items they import. I’'m not the expert here, but economics and diplomacy seem like the only answer to bring prices under control, according to me.

[sibot]

Originally Posted by Stratosphere

What we need here is a wholesome approach to reduce our dependence on foreign oil from partners who have high leverage over oil. India is not a small nation by any measure and can use an arsenal of measures at its disposal for getting what it wants. Countries playing the export game can be hurt by playing with items they import. I’'m not the expert here, but economics and diplomacy seem like the only answer to bring prices under control, according to me.

That is a long term perspective and definitely worth exploring. But what we immediately need is for the government to stop imposing high taxes to fund their excesses and fiscal deficit. The Central Government made hay when the prices of crude were hitting rock bottom by hiking the excise duty and boosting their revenue. Now that the crude prices are gaining momentum, I think they're testing waters to see how far can they go before the public sentiment turns against them.

At the end of the day, it is an essential commodity with very inelastic demand, people will continue to buy fuel even if it touches as a 100 because every one has places to go and work to get to. The whole argument that the government has no control over prices a total sham, that has been proved over and over again by state elections wherein the government has held up price hikes till the election is over.

Somehow under this government, people have a higher threshold for such high tax imposition and inflated fuel prices.

The OPEC group is quite powerful and with the impending Iranian sanctions, the supply will only get constrained. Which other OPEC members will make use of and ramp up their supplies in order to make up for losses for the previous years when crude hit rock bottom.

[Stratosphere]

Originally Posted by sibot

That is a long term perspective and definitely worth exploring. But what we immediately need is for the government to stop imposing high taxes to fund their excesses and fiscal deficit. The Central Government made hay when the prices of crude were hitting rock bottom by hiking the excise duty and boosting their revenue. Now that the crude prices are gaining momentum, I think they're testing waters to see how far can they go before the public sentiment turns against them.

At the end of the day, it is an essential commodity with very inelastic demand, people will continue to buy fuel even if it touches as a 100 because every one has places to go and work to get to. The whole argument that the government has no control over prices a total sham, that has been proved over and over again by state elections wherein the government has held up price hikes till the election is over.

Somehow under this government, people have a higher threshold for such high tax imposition and inflated fuel prices.

The OPEC group is quite powerful and with the impending Iranian sanctions, the supply will only get constrained. Which other OPEC members will make use of and ramp up their supplies in order to make up for losses for the previous years when crude hit rock bottom.

I agree that the government has the whole pricing system in shams and can do a lot to bring prices down in the short term. That is what everyone wants. But, realistically, how much should they cut the prices? What do we expect?

The country needs funds to run and taxes on fuel are the safest source of funds. Even if they reduce the duty by 4/5/6 units, they cannot assure that international crude prices will remain the same or go down. What if they reduce duties and crude crosses $80? Then we, as a country, lose twice. The government loses funds and we still pay the same price.

Even I'm frustrated with this scenario but I'm also thinking of the realities. Short-term, the fuel is only going up. So we need to do something concrete. Something which will have a lasting effect. Favourable for us and acceptable to others.

As for OPEC being a group of powerful nations, I agree. I may not know enough about it to discuss. But I also know that we just need to do something to break one of them. If anyone starts producing over their quota, everyone stops the supply glut and flood the market with oil. The prices fall back to $40 levels. It's a very fragile partnership, it seems to me.

On a lighter note, taking on other nations through diplomacy will be considered short term if we compare it to the time our government will take to work efficiently and stop using public funds according to their whims and fancies. 😁

[volkman10]

Amul's jibe on the fuel hike,