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    What will be the benefits to the final consumer if there is daily change in petrol price?


    Wondering whether variable petrol pricing will impact consumer? Looking out for expert opinion? On this Ask Expert page check out resolution to your queries.

    From 1st May, 2017 onward petrol and diesel prices will be changed daily. Though it will be implemented in select cities, it will be expanded slowly. We already see in jewelery shops such kind of daily variation in gold prices. Is there any real benefit to the final consumer because of such daily variation in the prices of petroleum products? Anyhow Government will increase the excise duty on petroleum products when the crude oil prices gets reduced, then what is the use of daily revision in petrol and diesel prices?
  • #142324
    Benefits to the consumer in daily pricing change of petrol and diesel:
    Theoretically, when daily pricing is made for petrol and diesel, the consumer gets the benefit of price reduction immediately the next day, instead of waiting for the next monthly price change as was earlier.

    Disadvantages to the consumer:

    1.The benefit mentioned above is just theoretical. But our practical experience is that the oil companies are reluctantto reduce the fuel price . We had experienced this in the last couple of years . Even when the international price came down almost to half, oil companies in India did not reduce price commensurate. They hiked the price in every opportunity, but reduced in just [pittance on a very few occasions. Even in the new mechanism also the oil companies will follow the same pattern and hike the price everyday. So in effect consumer has to go on paying a higher price every next day,

    2. We are all experienced to the daily pricing of vegetables , pulses and provisions, There we experience price rise in seasons when supply is less and get reduced pricing when the season is of ore supply. This seasonal variation cannot be expected in the case of oil sector. There it will be just increase only. The oil companies will definitely not pass o any reduction in international prices, but will quote some other reason to keep the price high. So the end effect is ever increasing price of petrol and diesel. daily.

    3. Sectors directly linked to the petro/ diesel price will also try to hike the prices(and never reduce) . Indian Railways is a perfect example who did not reduce fare even by a single rupee, but hiked much even when they gained from the oil price.

    As a Malayalam saying goes-"Onam pirannalum Unni pirannaalum Koranu kumbilil kanji")- whatever be the situation and change in situation, hapless consumers will only have disadvantages . They will end up paying perennially more, where as the oil companies will enjoy with their profits.

    As there are only monopolies in this sector, consumers will not have any say or impact in their pricing.

  • #142337
    I think that will only make things more expensive. And the prices of jobs and other things will increase. Like food, medicine and travel will be expensive. So I see that as inflation in directly. So I think this is very bad move. Much worst than the demonetization. Because daily price change is going to open more loopholes for the petrol pump to loot the people. And they can charge yesterdays high rate today and make more money. Who is going to monitor them? How they aree going to calibrate the machines daily? I think that's not a good thing that they are doing. It's going to be surely bad for the economy.

  • #142353
    As a end consumer, directly we are not going to get affected much. For eg., After they hike price by Rs.3rs for petrol. If you fill your car tank it is Rs.120 (40 litres). In case of bike it's RS.30 (10litres). In my personal opinion a nation with fluctuating inflation Rs.30 and Rs.120 is not a big deal.

    But as Venkiteswaran and Mahesh told there are more chances for the following to happen

    1. Petrol bunks stock the petrol with lower price and sell it for higher prices, Incase of an increase

    2. Price of daily consumables like food and vegetables increase picturing the petrol price increase and they never decrease (atleast for a while. )

    3. Oil companies for no reason increase the fuel prices. Even though the crude oil prices touch the rock bottom they won't decrease the petrol prices. If they reduce the price after two or three days even they will make millions and the consumers are the sufferers after all.

  • #142360
    In Foreign developed countries Petrol and Diesel prices changes daily. Implementing this in India make sense. Though it is not beneficial for now but for long term it is. Consumer or small scale population it is not making much different. Only benefit is on day when price is less , you can fill much petrol as you want. So this way price hike of petrol and non sense waiting in petrol pump lines before midnight will be gone.
    For large scale petrol / Diesel demanding industries it is defiantly gambling as even 1 Rupee change will make their expense more or less. Since we have already stopping 25 , 50 paisa it is expected change would be in Rupees.

    Avi
    Life Is Beautiful


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