[MuzzledMoose]

Originally Posted by harry10

He is not a man of his words. When Crude was $143 he said we will reduce if it comes below 90. When it was $120 he said we will reduce when it comes below 75. Few days back he said we will reduce when it will be at $67 and now $61.
Govt is ready to increase if it increases a bit but not ready to reduce when it has decreased so much. Some govt this!

Here people play dirty politics. In a country like india with second largest populice in the world, only a meagre percentage pays income tax. rest is recovered from fuel and liquor. SO election games are imminent

[iraghava]

Originally Posted by Mpower

So, if the price of crude goes down, the who pockets the money in India. Govt or the Oil companies??

Both. Companies get profits (finally) and the Govt. continues to get higher duties/taxes. But remember, the current prices are at the break even point for the companies with crude at around $70 per barrel, so don't expect a reduction soon. And I would say let the current prices remain for a bit, the companies too need to make some profits to reduce their overall losses suffered over the past few months.

[indian21r]

And if rupee keeps depreciating at the same as it is doing now, I see no hope for decrease in prices. Politics or not, a decrease is necessary for the long term stability.

[phamilyman]

madness. i dont want price cuts.

the underrecoveries are still there, and the rupee's depreciated 25% taking out alot of the oil gains.

better let everyone pay, than it go out of my tax.

PS: Has anyone here actually bothered to calculate the economics, than just cite their petty selfish interests!

[1100D]

Rather than a price cut, I would like a deduction from my taxable income, the amount I pay as taxes for buying fuel. Would anyone care?

[krish_tv]

Long while ago when crude oil was selling around $130 per barrel ,
I recieved an email saying " The truth about petrol prices".

The contents are below. I was wondering, if this is actually true?


"Malaysia Rs 18 per litre
Pakistan its Rs 25 per litre
In India it's Rs.52 per litre

Why is there a difference within India itself? World Market or CRUDE Oil is not the reason for this. It's all gain for private oil barrons and the govt.Find the detail break-up of the Final price of petrol available in pumps.

This is a break up considering crude oil at 130 $ per barrel. Following details are for per liter petrol in Rs.
Basic Price = Rs 21.93
Excise duty = Rs 14.35
Education Tax = Rs 0.43
Dealer commission = Rs 1.05
VAT = Rs 5.5
Crude Oil Custom duty = Rs 1.1
Petrol Custom = Rs 1.54
Transportation Charge = Rs 6.00
Total price = Rs 51.90

So for a Rs 22 liter petrol at pumps we people pay Rs 28 tax extra.

Govt. is thinking to impose more price hike to curtain with the current crude oil bubble in International oil crisis.

If Central Govt. wishes, it can still reduce the price of petrol in the current crisis situation, but it doesn't intend to do so, instead trying to fool the people and Nation".

[vasudeva]

Originally Posted by iraghava

Both. Companies get profits (finally) and the Govt. continues to get higher duties/taxes. But remember, the current prices are at the break even point for the companies with crude at around $70 per barrel, so don't expect a reduction soon. And I would say let the current prices remain for a bit, the companies too need to make some profits to reduce their overall losses suffered over the past few months.

Forget about where our taxes are going (to finance the opulent lifestyles of our `public representatives') for the moment or that oil is a scarce commodity for India and the world, and priced higher to encourage efficiency. At present, Indian basket is 65$, which is roughly the same as in 2006-07. But the basket was at $99-132 from Apr-Aug, and at 97 in Sep 08. The fiscal deficit is way up and indirectly we pay for below cost prices /subsidies through higher inflation (economics 101). The high prices have resulted in huge accumulated losses and just when oilcos are getting a breather, there is a demand for lower prices. If only prices were set to market (like the Govt. attempted to do in 2002-04), we would have paid higher prices upto say Aug and lower since then. Have you seen US prices. I think the tax there is 10.5-11%. They are down to an average of 3.1/gallon from above 4.

[amitoj]

Originally Posted by phamilyman

the underrecoveries are still there, and the rupee's depreciated 25% taking out alot of the oil gains.

better let everyone pay, than it go out of my tax.

PS: Has anyone here actually bothered to calculate the economics, than just cite their petty selfish interests!

Originally Posted by iraghava

And I would say let the current prices remain for a bit, the companies too need to make some profits to reduce their overall losses suffered over the past few months.

Originally Posted by vasudeva

Forget about where our taxes are going (to finance the opulent lifestyles of our `public representatives') for the moment or that oil is a scarce commodity for India and the world, and priced higher to encourage efficiency. At present, Indian basket is 65$, which is roughly the same as in 2006-07. But the basket was at $99-132 from Apr-Aug, and at 97 in Sep 08. The fiscal deficit is way up and indirectly we pay for below cost prices /subsidies through higher inflation (economics 101). The high prices have resulted in huge accumulated losses and just when oilcos are getting a breather, there is a demand for lower prices. If only prices were set to market (like the Govt. attempted to do in 2002-04), we would have paid higher prices upto say Aug and lower since then. Have you seen US prices. I think the tax there is 10.5-11%. They are down to an average of 3.1/gallon from above 4.

Quite true. Its very easy for us to watch the oil prices falling on CNBC and proclaim that there should be a price cut. But its easier said than done. Who will pay for the price cut? If the government reduces taxes, the budget deficit takes a hit. If the oil companies reduce the price they lose out on an opportunity to recover costs.

There was a small article on indianeconomy.org some time ago, that explains the pricing mechanism of petrol and diesel:
The Indian Economy Blog Upsetting Oil Pricing Conundrum

From the article:

Indian Oil Corporation (IOC) calculates inter alia the landed import duty paid price of petrol and diesel every fortnight. This calculation is based on a formula that is linked to international prices. IOC’s landed price of petrol in Mumbai for the second fortnight of May was, for instance, Rs 38.1 per litre and for diesel Rs 48.8 per litre. The marketing companies had to, in other words, pay this amount to the refiners to buy the products. Next, the Central government imposes an excise and educational cess on the purchase cost. In May, this was Rs 14.4 per litre and Rs 0.4 per litre for petrol and Rs 4.6 per litre and Rs 0.1 per litre for diesel respectively. The total cash required by the marketing companies to purchase petrol and diesel in May was, therefore, Rs 52.9 per litre for petrol and Rs 53.6 per litre for diesel. The companies then sell these products at the ministry of petroleum mandated price of Rs 49.7 per litre for petrol and Rs 35.6 per litre for diesel (Mumbai prices). As such, they lose Rs 3.2 and Rs 18 for every litre of petrol and diesel sold respectively.

That, however, is not their total loss. They have to also pay sales tax to the state governments. In Mumbai, this tax is Rs 10.6 per litre and Rs 7.1 per litre for petrol and diesel respectively. Thus, the total cash loss suffered on account of the sale of 1 litre in Mumbai is Rs 13.7 and Rs 25.1 for petrol and diesel respectively. This is, in other words, the amount by which prices would have to be increased at the retail outlet for the companies to simply break even on a cash basis. Such a hike is, of course, out of the question

This was in June.

[vasudeva]

Originally Posted by krish_tv

Pakistan its Rs 25 per litre

Look at the present fiscal situation of Pakistan. The public was paying Rs. 25/litre, yet the Govt. was paying more. On a micro level, consider what would happen if you had sell at no profit or at a loss. Where would you be, in our home or out on the streets.

[NetfreakBombay]

Originally Posted by vasudeva

The public was paying Rs. 25/litre, yet the Govt. was paying more.

And Pakistan is close to bankruptcy because of such policies.

India faced similar situation of extremely low reserves in early 90s (or was it late 80s). And we had to resort to Gold reserves. Fortunately, current PM understands finance and economics.

[vasudeva]

Read this:

http://www.dailytimes.com.pk/default.asp?page=2008\10\24\story_24-10-2008_pg5_12

The oilcos of Pakistan are owed huge amounts by the Govt, which the Govt cannot pay. The Govt has little money with which to keep on buying crude from abroad. The money that could have been earned is now in fumes generated by automotives. Only option is either to get credit (unlikely) to buy crude and sell at a loss, or indulge in piracy by relieving seaborne oil tankers of their cargoes.

[chncar]

Originally Posted by harry10

He is not a man of his words. When Crude was $143 he said we will reduce if it comes below 90. When it was $120 he said we will reduce when it comes below 75. Few days back he said we will reduce when it will be at $67 and now $61.
Govt is ready to increase if it increases a bit but not ready to reduce when it has decreased so much. Some govt this!

Remember that the value of the rupee has crashed from around 40 to a dollar about 3 months back to about 50 today.

That is a huge difference and cancels out some of the cheaper oil price.

Originally Posted by krish_tv

Long while ago when crude oil was selling around $130 per barrel ,
I recieved an email saying " The truth about petrol prices".

The contents are below. I was wondering, if this is actually true?


"Malaysia Rs 18 per litre
Pakistan its Rs 25 per litre
In India it's Rs.52 per litre

Firstly, stuff you find on the internet has to be taken with a pinch of salt.

Malaysia is an oil producing nation, and also gets cheap oil from neighboring Brunei.

About Pakistan the less said the better.

[snaronikar]

One more way is stop exporting of crude oil by our own pvt companies. They are making millions $ by selling the crude which is generated in India. If this stops, then they will be forced to sell the crude to indian oil companies which will be at much lower rates and they can also reopen their petrol pumps (which are closed now).

Govt has to take some tough decisions on these. But will this be possible is a big big question...

[vasudeva]

Originally Posted by snaronikar

One more way is stop exporting of crude oil by our own pvt companies. They are making millions $ by selling the crude which is generated in India. If this stops, then they will be forced to sell the crude to indian oil companies which will be at much lower rates and they can also reopen their petrol pumps (which are closed now).

Govt has to take some tough decisions on these. But will this be possible is a big big question...

At least, this export is value added and generates employment. Crude is imported and refined product is exported. In all fairness, they closed their pumps because they were not getting any subsidy from the Govt. Thus, they had either to sell at a higher price than the PSUs (not possible since then they would have made no sale) or sell at a loss. They could not sustain losses for long.

By the way, oil imports were US$10.34 billion in 8/08 (including crude oil at US$8.92 billion). Product exports were US$2.81 billion. The imported crude oil and products is used both domestically (India imports 70-75% of its requirements) and refined for exports.

[m8002?]

hi, any updates on the prices of shell fuel? Has it come down to the PSU levels now?