[Turbanator]

Fuel price meet deferred, higher diesel price eyed-

Source : Fuel price meet deferred, higher diesel price eyed - Reuters -

If you look at Diesel / Petrol prices in Europe & US - aren't we already amongs cheapest ..

source : Fuel Price Reports : AA monthly fuel price report for April 2011 - The AA

[motor spirit]

Something which i have come across today

[Vivek Bharat Ram takes a dig at diesel cars

NEW DELHI: The war between petrol and diesel automakers is hotting up ahead of an expected rise in fuel prices. Without naming Tata Motors and Mahindra & Mahindra, Delhi-based industrialist Vivek Bharat Ram has told the government that the widening gap between petrol and diesel prices was benefiting two of the country's biggest diesel car manufacturers at the cost of the exchequer.

"You are aware that there are mainly two large manufacturers who produce primarily diesel vehicles and, through the automobile associations, they have a strong lobby to keep status quo," Bharat Ram said in a letter to Planning Commission deputy chairman Montek Singh Ahluwalia . It is also marked to Congress general secretary Rahul Gandhi. Bharat Ram said every second car in the country would be running on diesel in "a couple of years" because of the "skewed policy of diesel subsidy" .

Buttressing his point, Bharat Ram said only one out of 10 vehicles was running on diesel "some years ago" . At present, there is a gap of Rs 20.62 a litre between the price of the two motor fuels in Delhi. Bharat Ram said as a result of the subsidy, diesel consumption by private vehicles – "passenger cars and SUVs" -- has exceeded consumption by the public transport and agricultural sectors. "It was never the intention of the government to provide this subsidy to the affluent which has reached levels of thousands of crores."

The ministerial panel on fuels is expected to take a call on Wednesday on raising diesel price by Rs 2-2 .50 a litre and cooking gas price by at least Rs 25 per refill to partially offset the effect of high crude prices. Around the same time, the oil ministry is likely to give state-run oilmarketers the cue to raise petrol price by Rs 3 a litre. Petrol is outside government control but firms do not revise prices without a signal from the ministry.

Bharat Ram suggested a one-time excise duty on sale of such vehicles as a way out. He said this was the "only way" to tackle the problem since subsidy on diesel could not be removed.
[COLOR=#0000ff]http://timesofindia.indiatimes.com/business/india-business/Vivek-Bharat-Ram-takes-a-dig-at-diesel-cars/articleshow/8213138.cms[/COLOR][/FONT]

[julupani]

@Turbanator

No we are not one of the cheapest out there, in fact we are actually one of the costliest. The document that you see has one big flaw. It doesnt take into account buying power of the people. In some of those countries buying a bottle of mineral water is costlier or as costly as a liter of fuel. Where is the value in India??

Compare the local buying power of money and then compare the prices. Not to mention the fact that on petrol at least almost 40% of the value you pay goes into taxes.

[.sushilkumar]

well,

all the speculation of diesel price hike is un-founded IMO. they might be discussing this but current govt don;t have the guts to take this hike decision as this will directly impact the growth and inflation . already they are fighting hard to control inflation and if this happened expect your loans to be dearer by at least 500 basis points , which would mean a direct impact on al most every sector

Even more bigger problem for govt would be the managing the vote bank. already common man is frustrated with all the scams and taxes .

one need to understand that the biggest consumer of diesel is transport and industrial sector . two very vital functions who will suffer immensely due to this hike and could bring country to stand still if they decide to protest via way of strikes and all. already transporters has shown their power when they last tried to increase diesel prices and rest we all know.

it would be interesting to know the stats wrt to consumption of diesel by cars and other sectors. if anybody can post them here pls .

[mjothi]

Subsidy to Diesel will be reduced? Stopped?

Forget it. I don't think any of the govt have guts to do that. And also, our policy are not "for" the people. But for the bureaucrats, industrialist etc...

[iSpoke]

Originally Posted by .sushilkumar

well,
it would be interesting to know the stats wrt to consumption of diesel by cars and other sectors. if anybody can post them here pls .

There was a rough comparison into this post,

Originally Posted by motor spirit

Buttressing his point, Bharat Ram said only one out of 10 vehicles was running on diesel "some years ago" . At present, there is a gap of Rs 20.62 a litre between the price of the two motor fuels in Delhi. Bharat Ram said as a result of the subsidy, diesel consumption by private vehicles – "passenger cars and SUVs" -- has exceeded consumption by the public transport and agricultural sectors. "It was never the intention of the government to provide this subsidy to the affluent which has reached levels of thousands of crores."

[StarrySky]

I'm really poor at economics, but curious to know how this works:

The govt increases diesel prices (or cuts diesel subsidy). Current diesel vehicle owners have no choice but to pay extra.

Among people buying new cars, a sizeable number may shift to petrol cars (as they are cheaper and diesel-petrol price difference is less). That would mean a much higher demand for petrol post the diesel price hike. More demand => higher price. So would petrol prices continue to go up till diesel again becomes an attractive option? And then the cycle repeats?

[ph03n!x]

Read somewhere that the govt. is subsidizing Diesel by 16 bucks - so if the subsidy is gone, Diesel will be Rs. 56.16 per liter in Madras. I also read that Petrol prices, though deregulated, would need to be hiked Rs. 7 a liter from the current 61.93 to Rs. 68.93 - this is assuming current taxes don't change, as it is likely to be that way.

We are still looking at about 12 bucks difference - and for the common man who's first question about a car is "average kya hai?", Diesel will always be around 15 KMPL (or 3.75 Rs per KM) with petrol about 10 KMPL (or Rs. 6.90 Rs. per KM).

For an average running of 1000 KM per month, the fuel bill for Diesel will be Rs. 3,750 for Diesel, and Rs. 6,890 for Petrol. Am sure the Rs. 3,140 saved per month will take care of the added cost of a Diesel variant, as well as the slightly higher periodic maintenance. Not to mention the higher resale value of modern Diesels.

IF ALL THIS HAPPENS - imagine the cost of common commodities.

[misquitas]

Instead of delivering mild blows every now and then, the government should seriously consider a knock-out punch by the passing the entire burden (to take petrol prices to international parity) on to consumers in one go. At least, the death will be swift and relatively less painful.

At this rate, I'm expecting petrol to reach the three figure mark very soon. As for diesel, I reckon it will remain at Rs 40 (here in Goa) till Maruti 800 celebrates its 50th anniversary!

Suddenly, my beloved Dec 2010 I10 is beginning to hurt me and I'm beginning to wonder if I made the right choice by opting for a petrol car (at a time when petrol was Rs 56 and diesel was Rs 38) as opposed to a diesel car.

Help, I need someone to cheer me up.

Melvyn

[pgsagar]

Originally Posted by misquitas

Suddenly, my beloved Dec 2010 I10 is beginning to hurt me and I'm beginning to wonder if I made the right choice by opting for a petrol car (at a time when petrol was Rs 56 and diesel was Rs 38) as opposed to a diesel car.

Help, I need someone to cheer me up.

Melvyn

I am sorry but nothing to cheer you up. Diesel will continue to be subsidised. This thread appears to be based on some media assumptions which are very less likely to materialise ever. So my suggestion to you is, if you are a high-miler, get yourself a diesel.

[shashank.nk]

I dont think the government will deregulate diesel prices. The subsidy is meant for agricultural purposes and also for railways and state transportation if i am not mistaken. The profits/losses these companies make will be severely affected by the price deregulation

[amit_2025]

Already contemplating a Verna RB mainly wanting to shift to a diesel (only because of the Petrol Cost)

This only adds to the confusion. If Diesel was to cost only 3-4 Rs./Litre less than Petrol then it might not be the right thing to do.

[trinadha]

But the difference only on price per km between petrol and diesel run cars to be RS.2 and considering an average run with a single ownership would be a lakh kilmetres....the total amount would be ..2 lakhs..oK straight to the point ...everyone would like to save that money which is meant for farming ,public transportation which is bad...aren't we are robbing our own country,i would advise any person for a petrol car ... one final thing we can save even more try car pooling ..use public transport...use bicycles...if car is must then go for electric... we are not policy makers...we are public who give them a chance to prove

[shashank.nk]

We as public can make a difference. But considering the usage some of us have, we would all like to save on the running costs. It is a faulty policy which no government will have the guts to change in my opinion.

[MaserQ]

This has been a contentious issues for a while now. With inflation as it is, GOI would think twice, thrice and a bit more before de-regulating diesel prices.

It would mean a ripple effect of sorts...rise in prices of essential commodities/services, interest rates, market uncertainty...the list is long. In short, expect the official statement to be 'deferred indefinitely'.