[amitoj]

Well, prepare yourself for another blow
Petrol prices may go up again next month - Hindustan Times

[lohithrao]

I think Karnataka can boast od the highest of all charging @72+ per liter, while the opposition is going all guns can the state govenrment do a bit to atleast keep the price below 70?

[ghodlur]

If the petrol prices in Mumbai have gone to 68/- then definitely in Thane it must be 70/- thanks to the octroi levied on the fuel.

Can any Thaneite confirm the prices. Whats the prices of Speed?

[Ragul]

Originally Posted by Fornax

But, like every other inflationary commodity, it then subsidises this purchase price, but then state governments add taxes resulting in petrol price shooting over the moon; about ~20% above the selling price in a free market. Reason being, the ultra-rich social stratum - Petrol Car Owners - are rich enough and can take it, but the acutely inflation sensitive ones - Diesel Vehicle Owners - are given a free ride at governments' expense.

Blame the petrol deregulation, or policies written for the 1950s, somethings' terribly amiss in this country's economic & social policy w.r.t. the two fuels - Petrol v/s Diesel.

Does it mean that we "poor" petrol users pay for the subsidies and low prices enjoyed by rich diesel SUV owners?

I don't like the idea one bit.

--Ragul

[msupercool]

This was the price of speed97 once upon a time, i can't imagine what it must be now? people running their cars on high octane fuel must be definately thinking of switching to normal fuel now!

[Fornax]

Originally Posted by Ragul

Does it mean that we "poor" petrol users pay for the subsidies and low prices enjoyed by rich diesel SUV owners?

Indirectly, Yes! The burden of the subsidy given to diesel cars & SUVs is really coming from the various direct & indirect taxes collected by the government. The government is grappelling in dark when it comes to ideas around de-subsidising private car diesel usage. Trust me, the intent of diesel subsidy was never meant for private consumption.

However, there is really no solution other than banning the usage of diesel cars OR de-subsidising diesel. Both are nearly impossible.

[sanjayk]

Price of ATF (Aviation Turbine Fuel) is cheaper than petrol. This from the article reported in Business standard. Now, it's cheaper to fuel planes than cars

Checkout the number of duties levied on petrol

1. Basic Customs Duty
2. Countervailing Duty
3. Additional Customs Duty
4. Basic Cenvat Duty
5. Special additional excise duty
6. Additional excise duty
7. Finally the state sales Tax/VAT.

Shocking, Govt taking so many pains to trouble its citizens!!!


Sales Tax or VAT is the highest for Andhra Pradesh at 33%. There needs to be a serious introspection done by Petrol Car users on reducing the consumption.

Can we adopt a public boycott of "Buying Petrol" atleast for a day or two? I know it sounds insane, but on the lines of "Taxi Boycott" done by Mumbaikars.

Would the petrol stored underground evaporate if not consumed in this hot summer?

[mac187]

Originally Posted by Fornax

Indirectly, Yes! The burden of the subsidy given to diesel cars & SUVs is really coming from the various direct & indirect taxes collected by the government.

Trust me, the intent of diesel subsidy was never meant for private consumption.

I dont think you 100% correct here. As far as i know, the decision to subsidise Diesel was taken hand in hand with the decision to tax Diesel vehicle (esp private vehicles) higher than petrol.

Here is what i know, the percentage of tax on diesel pvt vehicles was set after calculating
((the expected years a vehicle will be used X (kilometers covered each year ~ Fuel consumed each year) = subsidy enjoyed by pvt diesel vehicle in its lifetime)*
The calculation may have become obsolete now. But i had read somewhere that this is why Diesel vehicles are taxed higher than Petrol vehicles.

*this is not the actual formula, just wrote it this way to be clear.

[msdivy]

Originally Posted by mac187

with the decision to tax Diesel vehicle (esp private vehicles) higher than petrol.

I thought the diesel cars are priced high due to higher manufacturing costs. Does any state in India have a tax only for private diesel vehicles?

[vina]

Originally Posted by Fornax

Trust me, the intent of diesel subsidy was never meant for private consumption.

There was never any intent on any subsidy on diesel (or petrol - stop cribbing, even petrol is being subsidized right now).

They use to have an "oil pool" in early days, and the intent was to smoothen the price of fuel at the pumps (in the face of crude price volatility) by putting profits into the pool when crude prices dropped and taking money out when the crude prices went up.

Over the years the transport lobby (and now the vocal middle class) forced the government to refrain from increasing diesel (and now petrol, LPG) prices even when the crude remained high for long durations. When the subsidy burden became too high government dismantled the oil pool (it had to if it wanted to privatize the OMCs) and converted the difference into direct subsidies financed by oil-bonds.

Oil-bonds are debt taken by the state - both petrol and diesel buyers are being subsidised and no they are not paying via any taxes right now. We will be paying for it the way we pay any long term debt - via our future taxes.

since the subsidies are unviable in the long term anyway, you can be sure our children will have to literally pay this debt via their taxes.

[DicKy]

I can't understand why many teambhpians are complaining about subsidies given to diesel and all, when in fact the price of a litre of petrol after all transportation and refining process is about 35rs/litre.
And the rest are all taxes,duties,cess,whatever name you can find.
Seems like we are in league of Europe and Japan to command this price as the result of being a small country and also high per capita ownership of vehicles.
Come on guys,if the tax collected where being used for better infrastructure and all,i wouldn't have complained. Even if better infra is there,at once toll is levied,even on a 300m long beam bridge.
A similar to us China has half the price. Even countries that should tax petrol more like Malaysia pay half than our price. And can't understand the logic of our neighbours(Pakistan,Sri Lanka) having way lower prices.
Guess this should shut up those who argue about international barrel prices.

[cooljai]

One litre of petrol @ Rs 67/litre=Rs 10700 per barrel of petrol=USD 238 per barrel. This is when crude=USD 100/barrel. Impact of central/state taxes
Source: Twitter

[vina]

Originally Posted by DicKy

I can't understand why many teambhpians are complaining about subsidies given to diesel and all, when in fact the price of a litre of petrol after all transportation and refining process is about 35rs/litre.
And the rest are all taxes,duties,cess,whatever name you can find.
Seems like we are in league of Europe and Japan to command this price as the result of being a small country and also high per capita ownership of vehicles.
Come on guys,if the tax collected where being used for better infrastructure and all,i wouldn't have complained. Even if better infra is there,at once toll is levied,even on a 300m long beam bridge.
A similar to us China has half the price. Even countries that should tax petrol more like Malaysia pay half than our price. And can't understand the logic of our neighbours(Pakistan,Sri Lanka) having way lower prices.
Guess this should shut up those who argue about international barrel prices.

you are right, but the situation is a little more complicated.

A big portion of the taxes on fuel is state taxes. Center doesn't tax as much - but provides 100% of the losses of OMCs. For petrol center does keep some money, for diesel sometimes it does and sometimes it doesn't (on an average it does) - for kerosene and LPG it loses money - those are social sector subsidies.

By the way, you should wonder why the PSU companies do not cry out loud against this non sense - and the answer is (no surprises here) - they benefit too.

Their refining costs, transportation costs etc. are such that they can not really compete on their own (when the Reliance pumps started in NCR several years ago, they were selling petrol cheaper for some time) - govt. subsidy keeps the competition out by reducing the price below the cost of competition while guaranteeing profits (even if in the short term it is a pain) for the PSUs.

[supremeBaleno]

@vina, are you suggesting that petrol is not cross-subsidising diesel (maybe even LPG and kerosene) ? And if you think petrol is currently subsidised then either you dont know the math or are ignoring reality.

When I tanked up last for 3100Rs, petrol was ~62 a litre. Production costs for a litre would be 50% this or say 30bucks a litre, with the rest being taxes/duties shared by Central and State governments. While I agree that bleeding the oilCos means cutting our own hands (we having to pay it back in taxes), there indeed is another way to help them atleast break even. Reduce the taxes charged by state/Central Govts and divert that money to the oilCos.

Coming back to topic, I dont have any issue with the recent 5buck increase in petrol price. Hopefully it will help us not waste a non-renewable source of energy or atleast use it carefully.

[vina]

Originally Posted by supremeBaleno

@vina, are you suggesting that petrol is not cross-subsidising diesel (maybe even LPG and kerosene) ? And if you think petrol is currently subsidised then either you dont know the math or are ignoring reality.

When I tanked up last for 3100Rs, petrol was ~62 a litre. Production costs for a litre would be 50% this or say 30bucks a litre, with the rest being taxes/duties shared by Central and State governments. While I agree that bleeding the oilCos means cutting our own hands (we having to pay it back in taxes), there indeed is another way to help them atleast break even. Reduce the taxes charged by state/Central Govts and divert that money to the oilCos.

Coming back to topic, I dont have any issue with the recent 5buck increase in petrol price. Hopefully it will help us not waste a non-renewable source of energy or atleast use it carefully.

Well if you bring taxes into the picture, then diesel is not being subsidised either ! prices at the pump are higher than prices at the refinery minus the import taxes on crude oil.

From the refinery gate to the pump the tax is roughly 50%, or 1.3rd of the final price. 2/3rd of what you pay goes to the refinery.

Subsidy on LPG/kerosene is explicit, that is not same as what you get on petrol/diesel.


Oil co.s are no saints, plus these are now privately owned companies with govt. as majority stock holder. Vis-a-vis petrol Govt. is in the business of creating a tax regime where fully private refiners (reliance for example) can not make money by selling their product at a reasonable price - without govt. support (in the form of Rs.5/litre subsidy on petrol) HP/IOC/BPCL will lose marketshare.