[ex-innova-guy]

Originally Posted by Mystic

Retailers of gas stations in USA and Saudi make a very small margin less than 2%. Our Indian gas station owners are making a lot of money comparatively.

A friend runs a HP fuel pump, and the margins are quite low, as @ashis89 rightly mentioned. For petrol ₹2.75 and for diesel around ₹3.15 to ₹3.50 per litre.

[stewie]

If I remember, there were some reasons mentioned for why Govt. was not reducing fuel prices, the main one being the repayment bill for Oil Bonds used by UPA II govt for fuel subsidy.

Link: https://www.ndtv.com/india-news/rs-1...h-puri-2527795

Also, this govt. seems to be dipping into fuel profits to run various welfare schemes.

I am happier to have these kind of schemes being bankrolled by fuel prices rather than increase income tax or some other cess/levy.

[fordday]

Originally Posted by ex-innova-guy

A friend runs a HP fuel pump, and the margins are quite low, as @ashis89 rightly mentioned. For petrol ₹2.75 and for diesel around ₹3.15 to ₹3.50 per litre.

This is not a small figure actually.
For sake of simplicity, lets assume the retailer buys per litre petrol at Rs 100 and sells it at Rs 102.75
This means 2.75% gross profit. And this happens approximately in a two day turn around. They recycle this money, which means about 40% profit in a month.
Bank FDs give you only 7% in a year.

Here is a X post on how retailers work on 1% margin link

[Silver Knight]

I own a few petrol stations. There is a profit of about Rs 3.4 per liter on petrol and Rs 2.20 per liter on diesel. But petrol is tricky because it evaporates, so we lose around 30 paise per liter as evaporation loss. Dealer can also make extra money by using their own tanker trucks. The expenses (labour, electricity, bank charges, loan interest, investment etc) need to be covered from this margin.

[ABHI_1512]

Originally Posted by aniketi

We are used to current fuel prices now, instead of decreasing the fuel prices I think government should keep prices constant for next few years.

Problem is, ‘We’ the car owners don’t exactly constitute the ‘We- the majority’ and therein lies the problem. When a developing country makes windfall gains from its own people then it becomes a problem for me at least. The cascading effect of high oil prices are seen every where and we all know that.

The tax collection from fuel is probably among the highest in the whole world. I still remember what the late finance minister said while increasing the taxes continuously. He said , we are now creating a corpus so that when oil prices rise, we can provide relief to the common people. I can only laugh at that statement now.

By the way, did you realise that oil prices have not moved for more than a year now. So all this talk of oil prices moving with international crude prices was another flying pauper.

Originally Posted by stewie

If I remember, there were some reasons mentioned for why Govt. was not reducing fuel prices, the main one being the repayment bill for Oil Bonds used by UPA II govt for fuel

Oil bonds theory has been beaten to death now. But still reproducing here once again.

https://www.moneycontrol.com/news/bu...s-2984731.html

The above article was from 2018, please go through it and please also find out how much of taxes were collected from fuel in the last 10 years. It is astoundingly high and surpasses anything related to oil bonds payments.

[SmartCat]

Originally Posted by fordday

They recycle this money, which means about 40% profit in a month. Bank FDs give you only 7% in a year. Here is a X post on how retailers work on 1% margin

In this bank FD example, we calculate returns based on how much we've invested. Rs. 1 Lakh invested gives Rs. 7,000 returns in a year.

Similarly, for the petrol pump business, you need to see how much the owner has invested in the entire business. For eg (just random estimates):

Land: Rs. 9.0 crores
Civil works: Rs. 0.7 crore
Inventory of fuel (say 30,000 litres): Rs. 0.3 crores

So here, you should calculate monthly/annual returns based on the entire investment amount = Rs. 10 crores. And not just on the petrol/diesel inventory of Rs. 0.30 crores.

[stewie]

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[finneyp]

The thread title should be how the Govt is duping people by charging high taxes on the fuels!

[jalex77]

Some people here are under the impression that a large amount of money from fuel taxes and cesses are used for making roads. They might also be under the impression that these expressways are all being built that way. It is a fact that the National Highways Authority of India spent ₹2,07,000 crores on national highway construction in 2023-24. But I think you're missing another major fact here that these roads are also heavily tolled. Last financial year's toll collection, that is for 2023-24 alone was Rs 64,809.86 crores.
Also note that India's overall toll collection has increased by nearly 2.6 times in the past five years from Rs 25,154.76 crore in 2018-19. Total toll revenue stood at Rs 27,637.64 crore in 2019-20, Rs 27,923.80 crore in 2020-21, Rs 33,907.72 crore in 2021-22 and Rs 48,028.22 crore in 2022-23.The government estimates that total toll collection in India will likely surpass Rs 70,000 crore in 2024-25 and rise to Rs 1,30,000 crore by 2029-30. We also pay Road Tax for 15 years while buying a new vehicle and that money too is used by states in the country for maintaining and building roads as well.

The government estimates that total toll collection in India will likely surpass Rs 70,000 crore in 2024-25 and rise to Rs 1,30,000 crore by 2029-30.

We also pay Road Tax for 15 years while buying a new vehicle and that money too is used by states in the country for maintaining and building roads as well.

[binand]

Originally Posted by Silver Knight

I own a few petrol stations. There is a profit of about Rs 3.4 per liter on petrol and Rs 2.20 per liter on diesel.

Don't the OMCs take a part of that back as the cost of licensing their brand?

[RunGaDa]

If crude oil is cheap then the first priority should be to keep war time reserves and natural calamity reserves.
Once that is done give the benefit to the customer.
With Israel, Iran, flaring up the oil will start getting costly.
Since the govt of India has given zippo to the customer when oil was at rock bottom during covid lockdowns they would attract “Feel bad factor” if they increase the prices now.
Multiple governments have come and gone but no one is able to get a 40 year stable fuel pricing policy.
From the past experience I fear that govt will increase the prices. After all the tax paying petrol buyer is an easy cash cow.

[xway]

Fuel in India is full on robbery by all, and the victims are citizens.

The current price per barrel is USD 74 (down from 95+ a month back) or INR 6000 for approx 160 litres, which makes the nett cost of petrol to 38-40rs/ltr.

There is a markup of 250% approx on 40 rs. and we pay close to Rs. 100/ltr.
Most of this is taxes and little on refining and dealer margins.

Not to mention the mixing of 20% cheap ethanol, which further brings down the price, but again no benefit passed over to the consumers.

Government mentions that Petrol prices are market linked but inspite of prices crashing by 25% there is not a single penny reduced.

The ethanol blending is horrendous to say the least due to -

- Decreases mileage (reduces by 20 to 25%)
- Bad for Engines as most are not capable of this blend even now
- The ethanol is magnet for insects and eats away the rubber and gaskets
- Your car life is reduced
- No benefit of mixing of cheap ethanol passed to customers so they pay 100% petrol and get 20% ethanol

I certainly hoped there could be something that can be done for this.

[RunGaDa]

Originally Posted by xway

Fuel in India is full on robbery by all, and the victims are citizens.

Couldn’t agree more. What can be done to oppose this? The daily officer goer is not going to leave jobs and stop buying exorbitantly priced fuel, neither they are all going to go electric because there is no charging infra in our country - city commuters specific .
Hence loot the poor people.
That is the agenda.

[NomadSK]

Originally Posted by Silver Knight

But petrol is tricky because it evaporates, so we lose around 30 paise per liter as evaporation loss.

You just touched a raw nerve here. It's a big big concern for the refining industry. There are enough studies to show a loss of 1.5-2% of petrol from refining to consumer due to evaporation losses during the transportation phase. India has around 90000 retail outlets, now add this percentage of losses, which is humongous. Unfortunately its the monetary loss to the pump owners and environmental damages due to the hydrocarbon fumes which causes air pollution. You can smell petrol while approaching the petrol station, those are just the volatile fumes in the air.

The evaporation rate of petrol and condensate is logarithmic over time because the more volatile components evaporate first at high rates followed by the less volatile components. That's why in floating roof tanks where products are stored, the circumference of the tank is sealed with flexible rim seal to prevent vapors from escaping.

However for movement/transportation, a method has been developed to reduce evaporation losses by introducing a fuel additive which is a surface-active agent. (This is where technologically advance refineries with isomerization units comes into picture) This additive reduces the vapor pressure of petrol while also reducing the surface tension of the fuel droplets at the interface with air and dropping down the evaporation losses, though cannot be completely eliminated to 0% as of today and huge studies and time is being invested at the moment to reduce this percentage further.

[somersault]

Originally Posted by SmartCat

To expect OMCs to "pass on" profits to people sounds so communist. They need to keep the profits & reinvest to increase refinery capacity. Eg:

BPCL to invest Rs 1.7 lakh crore in next 5 years
https://indianexpress.com/article/bu...years-9521270/

No Sir, this is not going to happen. Government will force them to receive a very big dividend. So its the taxes on fuel and profit sharing from all the profit by OMCs.

I fail to understand how some people are able to defend such high level of taxes. If the argument of taxes being used for development is used, then that was always the case since the beginning of the economy for thousands of years. Then, there will be no stopping for government to increase the taxes to 200% or fuel to Rs 200 per liter under the same argument. The concern point here is what level of taxes or prices are fair prices for aam junta in India. You already have Income tax, indirect tax like GST etc from which the development spent is being done, which includes development for infrastructure as well. Now in recent years, we have tolls which are not going even after capex recovery. Add to this is the increase in excise and other taxes which happened in last 4-5 years. On top of this, the dividend from the profits these OMCs are generating. That is how Government has increased their tax income.

My 2 cents.