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  • Category: Miscellaneous

    Interesting: Petrol price and diesel price are moving in opposite direction!

    Currently we are witnessing fluctuating oil price in the international arena. This fluctuation has now influenced the domestic price of petroleum products. On Thursday (yesterday), the state-run Indian Oil Corporation (IOC) moved in contradictory ways on transport fuels, increasing the price of petrol by 58 paise per litre and decreasing diesel by 31 paise per litre effective from midnight applicable at Delhi, with corresponding changes in other states of India.

    From today (Friday), Petrol per litre will cost Rs 64.21 in Delhi, Rs 67.42 in Kolkata, Rs 69.13 in Mumbai and Rs 63.76 in Chennai. On the other hand, diesel per litre will cost Rs 52.59 in Delhi, Rs 54.89 in Kolkata, Rs 58.10 in Mumbai and Rs 54.06 in Chennai.

    However, even after taking into consideration the fluctuation of oil price, I haven't yet understood the logic of increasing the price of petrol and simultaneously reducing the cost of diesel. Can any Member explain this to me?
  • #578841
    Previously there used to be vast difference between petrol and diesel prices and due to unplanned price hike on diesel the difference between the two is not that much and the diesel vehicle owners are fuming at pricing and hence this step.
    K Mohan
    I consider myself as the learner everyday

  • #578847
    The oil price in India depends upon the international oil rates, but it is somehow high due to the exchange rate of rupee with dollar. On closing of Thursday, one dollar was 67.02 rupees. Suppose internationally the price of crude oil of one barrel is around $50 and while importing to India extra $2 has been charges as ocean freight. So the overall cost comes $52, i. e. Rs. 3485/- ($52x67.02). One barrel consists around 159 litres of crude oil. So basic price per litre comes Rs. 21.92/- (3485/159).
    Now the total price of petrol comes after addition of RTP (Refinery Transfer Price), Excise duty, VAT, Dealer commission, Education cess, Crude oil custom duty, Petrol custom and Transportation charges.

    Naresh Kumar
    'Every bad situation will have something positive. Even a dead clock shows correct time twice a day.'

  • #578849
    Only the international crude price don't determine the cost of petroleum products. In India, the petroleum products are a huge burden on the economy as certain products are subsidised. Though the prices of the petrol and diesel have been deregulated, but the prices of Kerosene and LPG are determined by the Government only. During the year 2015-16, budget estimates for petroleum subsidies was slashed by 50%.

    The difference between that market prices and the retail rates i.e. under-recoveries are to be borne by the oil marketing companies. Therefore, fluctuation in the petrol diesel prices is not a simple arithmetic directly related to the ups and downs in the international crude oil price. It is instead a complex process and may better be left to the oil companies and the Government.

    Let us encourage each other in sharing knowledge.

  • #578851
    But I would like to know why the petrol price has been increased and at the same time the diesel price has decreased? Where is the co-relation between the international price of petroleum products vis-a-vis the price of petrol and price of diesel?
    “Whenever I feel the need to exercise, I lie down until it goes away.” - Paul Terry

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