[sgiitk]

So the deed is done 10% increase in Petrol and Diesel and LPG expected to follow once the EGoM meets - it has not met for over a year!). Kerosene stays the same, to further spike our diesel.

In between watching the India Phatta League I saw the discussion on the TV. Some observations:

1. GoI pockets over Rs.28 per litre (now it will be 29+) from Petrol.
2. The under recoveries are mostly notional (based on global prices of petrol). As per Yechury the cost of refining in India is 1/4th of the global one. Also, every year the OMCs are paying a fat dividend to GoI so something is hidden.
3. The politicos made their usual asinine remarks. Interesting ones were Lalu blaming the oil prices and rupee fall to an Uncle Sam led conspiracy. Mamata crying loudly but not willing to pull out of the UPA (with MSY, with his multiple CBI cases, on-board who cares). Mmata has been told no fuel hike, no WB package (so she may get something). DMK doing the same. They are in a deep 2G soup so dare not cry too loudly.
4. The TV chaps were no better. After the BJP to have all their states do a Pannikar, irrespective of the state finances, and not asking the GoI to reduce their cut. Do I see some Padma awards on the horizon?

I now expect the markets and rupee to improve a bit, at least in the short term.

Forgot to add one thing. There is a tacit acceptance that petrol subsidises Diesel, LPG etc to some extent.

[Hayek]

Originally Posted by mercedised

On some NEWS channel I read that Diesel prices tobe raised by 14 Rs tomorrow or this week.

Originally Posted by vaibzi

Doing that will be like the govt shooting their own foot with a machine gun!
It will cause a complete economic meltdown for sure.

Originally Posted by rnidumolu

I seriously doubt this. What I came to know is this is the amount of loss the oil companies are making after selling ot each liter of diesel. Raising 14 rupees on diesel would have Tsunami effect on the economy.

Sorry, but it's failing to raise diesel, LPG and kerosene prices that is turning India into a Potemkin village. Raising diesel prices will cause people to use it more efficiently, and help reduce oil imports, apart from freeing resources to reduce the deficit. The direct inflationary impact of a hike in diesel prices would be less than 1% on even low value commodities like cement.

Originally Posted by mercedised

"The per barrel cost of crude was 114$ on 15th May 2011, and at that time a dollar equaled to 46 Rs. So, for one barrel we used to pay 5244 INR. But in today's scenario the crude is at 91$ per barrel and a dollar now equals to 56 INR, so one barrel in today's scenario costs only 5096 INR, which means that the companies are buying crude oil 148 Rs cheaper."

The truth is when the crude oil was 114$ per barrel then too the oil companies were showing losses and now when it stands at 91$ per barrel (148 Rs cheaper actually they are buying) then too the oil companies are showing losses.

The news item above is complete bull by the way. Go to Bloomberg.com. Brent crude is trading at USD 105, it's NYMEX WTI crude that is at USD 91. And WTI is trading at a discount because it measures crude prices in the middle of the US at a place which lacks pipelines to get the crude out - net result, refineries in the mid West are making a lot of money selling petrol at market prices while getting cheap crude. This has no impact on India whatsoever. Your second point is valid however.

[sumathindra]

Well i think it is just a matter of time that diesel prices will also increase substantially. Just look at the number of diesel vehicles on the roads and the consumption of diesel. How long can the subsidy be given to diesel by penalizing petrol prices...

[RS_DEL]

Originally Posted by Hayek

Sorry, but it's failing to raise diesel, LPG and kerosene prices that is turning India into a Potemkin village. Raising diesel crude out - net result, refineries in the mid West are making a lot of money selling petrol at market prices while getting cheap crude. This has no impact on India whatsoever. Your second point is valid however.

Very well said.

I am no bloody masochist who relishes inflicting pain of a high cost of living on myself. Having clarified as to my mental state, I will submit - I firmly believe that this entire mess of energy pricing is due to the stifling control of the state on energy prices in India.

As you rightly point out freeing the prices of fuel alternatives is the way to go - consumers will work on enhancing productivity/efficiencies. But then that will ONLY happen when the stimulus to do so comes from external pressures.

[selfdrive]

Originally Posted by sgiitk

Forgot to add one thing. There is a tacit acceptance that petrol subsidises Diesel, LPG etc to some extent.

Originally Posted by Hayek

Sorry, but it's failing to raise diesel, LPG and kerosene prices that is turning India into a Potemkin village. Raising diesel prices will cause people to use it more efficiently, and help reduce oil imports, apart from freeing resources to reduce the deficit. The direct inflationary impact of a hike in diesel prices would be less than 1% on even low value commodities like cement.

You guys hit the nail on its head. Twice over!
Unfortunately the GoI is hitting the nail where it hurts us. I dont understand when our hon'ble PM says difficult measures are in order and then forces it on the working classes. If these are so much in order, let him start at the top and make examples. If the elected classes also see some difficult measures then it would still be a bitter pill, but at least a little easier to digest.

Here every second scam proves that some people are going to town while the working class suffers.

Originally Posted by RS_DEL

As you rightly point out freeing the prices of fuel alternatives is the way to go - consumers will work on enhancing productivity/efficiencies. But then that will ONLY happen when the stimulus to do so comes from external pressures.

I have said this before and say it again. It would be better to deregulate all fuel prices (petrol/ diesel/ LPG) and offer tax rebates or returns to an extent. This will ensure consumption is regulated to an extent and also submission of proper tax returns.

And I read somewhere that the proposed diesel hike is only 5rs. Are you kidding me?!
There was a time in 2009 when diesel was 32 and petrol was 45. Look at the prices now. Enough of getting petrol buyers to subsidise diesel.

And what about the absurd tax structure? Ridiculous that we pay almost 30 bucks tax for a litre of petrol. Arent we paying enough tax elsewhere already?

[shankar.balan]

With all these taxes that these chaps raise by killing us regular Joe's with raising Petrol, Diesel and other Fuel prices, why can't we poor tax paying, regular Indian Joe's even get proper infrastructure, roads and public transportation systems?

The state of the roads in India and in particular in and around Bangalore, have to be seen to be believed - the contrast is so very stark each time one returns home from a visit, however brief the visit, to anywhere outside the country!

If we had a proper bus system and/ or metro rail system with fair and equitable last mile connectivity, I for one would not want to use my personal vehicle at all, except for outstation drives!

Pathetic scenario and makes one seriously consider emigration as a possibility.

[mobike008]

Hyderabad Fuel Prices for normal petrol

Pre-Increase (until May 23rd, 2012) : Rs.73.08/Litre

Post-Increase (From May 24th, 2012) : Rs.81.44/Litre

Increase/Litre : Rs. 8.36/Litre

Is this the highest in the country?

[samarjitdhar]

Originally Posted by shankar.balan

Pathetic scenario and makes one seriously consider emigration as a possibility.

Sadly this is something I am also giving serious thought to now. I have been thinking hard about this and feel that our country has now been pushed to the brink due to decades of retrogressive policies based on reservations and subsidies. While other nations moved positively towards building a strong foundation for its most deprived citizens, our politicians right from Chacha Nehru was plotting on how to use the reservation and subsidy game to stay in power. To call this a banana republic is understating it by a long way. Years of myopic planning and policy making, citizens including our previous generations shirking responsibility and discipline, I am sorry to say have finished us. Given the deficit and balance of payment situation, total political anarchy I am afraid that our country's days as a stable democracy are numbered . Specially when we do not even have a credible opposition party in place which can act as a counter.

As to the point of hiking diesel prices would cause people to become more efficient thereby not affecting inflation is a fantasy. There are so many corrupt politicians and babus sitting for this perfect opportunity to fatten their wallets. Sorry to say but a diesel price rise is just going to push inflation through the roof, let me correct that. It will push it through the roof of the Burj Khalifa. Specially when there is no absolutely no way to distinguish consumption of diesel between the classes and the masses. Forget about putting such a mechanism together even which will lead to more even corruption. All of this ties back to my earlier point, as I said, as a country we collectively have failed :(.

[shankar.balan]

Yes I completely agree to the points in your post. Chacha indeed - that man and his ilk was responsible for much of the rubbish that we are today forced to live with!

It almost seems like a set of arbitrary policies that we need to bear with -is this country really a democracy or a kleptocracy?

As it is veggie and other essentials have risen through the roof. With additional charges on Diesel and Petrol they will rise further. So what becomes of the savings possibilities then?

In a scenario where there is no return for the tax money one pays, where there is no proper education, public infrastructure and health care accessible to people, except exorbitantly priced private care, what is the point of paying all these taxes?

Looks like in India only the political filth gets more lucre into their pockets and everyone else can go and jump!

I mean, I wouldnt mind paying a high tax rate if I get something in return but in this scenario, why should we be forced to pay so much for so little??

Originally Posted by samarjitdhar

Sadly this is something I am also giving serious thought to now. ......., our politicians right from Chacha Nehru was plotting on how to use the reservation and subsidy game to stay in power. To call this a banana republic is understating it by a long way. Years of myopic planning and policy making,
There are so many corrupt politicians and babus sitting for this perfect opportunity to fatten their wallets. Sorry to say but a diesel price rise is just going to push inflation through the roof, let me correct that. It will push it through the roof of the Burj Khalifa. Specially when there is no absolutely no way to distinguish consumption of diesel between the classes and the masses. Forget about putting such a mechanism together even which will lead to more even corruption. All of this ties back to my earlier point, as I said, as a country we collectively have failed :(.

[dustom_99]

Once again junta is going to pay for govt s inability to look and plan for future. In late nineties, massive money was spent for bio gas plants in truck load of villages, however no education or maintenance training /spareparts was imparted to locals. Result- none of the plant remained operational in just few years time. In all probability bio gas project was started not with intention of providing villages with clean fuel, but to provide contractors and officials some new project where they could take in some more mint.
In early 2000 similar projects were started for bio diesel, we all know where that bio diesel is now. infact now there is no alternative energy policy from govt s end. Top indian minds in iits and other to universities have not contributed to solve or manage , or may be they are simply there to do a job and collect there pay slip.
Even now people will pay for fuel whatever the govt will ask them to, we as indians have no choice but to comply. Standing against any significant opposition is not our style,i fail to remember when was the last time we stood up. One lathicharge and next day people would not mind staying at home.

YouI would be happy to pay even 100 bucks a ltr(not that I can afford it and will have to bring down my usage), if only I knew that something is being planed and someone out there is serious to reduce burden on lowest level of society.
But to my utter disbelief, power , land, civic amenities, taxes and regulations are either subsidised or relaxed for corporate houses , who can afford, and passed on to rickshaw puller and street vendor when they go to buy sugar and salt for there footpath home.

nikon tons of food grains are ready to go to drain with monsoon approaching,Fm says we do not have jute bags.(how pathetic am excuse can get).
Opps we forgot to makejutebags, cold storage, schools, hospitals, irrigation canals, roads, railways because we were too busty making F1 tracks, icbm s , ipl , air conditioned malls.
We forgot to buy fuel for the nation or put in place pipelines for its transport, w were busy spending poor nations money in multirole fighters (who are we fighting with airplanes by the way)
We might still be climbing the hill of growth, but we surely are heading towards s mammoth slide off the cliff.

[Suess]

They increased the price to save INR but it isnt saved by the end of the day. still looming in its 56!

Anyway, in all this stupidity, i fail to understand (and people fail to even see, i think); "why the hell on earth we have 3-4 GOI owned oil/gas companies?"

- They are just wasting money on adminstration of 3-4 entities where one can do.
- They are wasting money on ads/marketing.
- They are wasting money in competing with each other where they should have been working together to bring benfit to India and her people.

Money saved by making one company, can be passed to customers in the form of lower price.

[babu.sundaram]

Originally Posted by dustom_99

But to my utter disbelief, power , land, civic amenities, taxes and regulations are either subsidised or relaxed for corporate houses , who can afford, and passed on to rickshaw puller and street vendor when they go to buy sugar and salt for there footpath home.

nikon tons of food grains are ready to go to drain with monsoon approaching,Fm says we do not have jute bags.(how pathetic am excuse can get).
Opps we forgot to makejutebags, cold storage, schools, hospitals, irrigation canals, roads, railways because we were too busty making F1 tracks, icbm s , ipl , air conditioned malls.
We forgot to buy fuel for the nation or put in place pipelines for its transport, w were busy spending poor nations money in multirole fighters (who are we fighting with airplanes by the way)

Haves always dominate have-nots. Democracy or anything gives an excuse for the domination!
Interestingly, barring ICBM, rest all are developed by private sector. Every single Govt unit is set up to fail (to benefit..).

Originally Posted by selfdrive

There was a time in 2009 when diesel was 32 and petrol was 45. Look at the prices now. Enough of getting petrol buyers to subsidise diesel.

And what about the absurd tax structure? Ridiculous that we pay almost 30 bucks tax for a litre of petrol. Arent we paying enough tax elsewhere already?

In 2009, petrol vehicles dominated diesel in numbers. It was possible to offset diesel loss with petrol sale with a surplus. At the current rate, I wouldn't think it is going to be even think of that and this policy would fail. (Think of the petrol, diesel consumption figures & growth).
At some point, it would hit the hard brained policy makers that the policy does not work. We could expect some changes then! (Unfortunately, with the mounting fiscal deficit and so called subsidies, all might be bust by then!).

[sumathindra]

Originally Posted by mobike008

Hyderabad Fuel Prices for normal petrol

Pre-Increase (until May 23rd, 2012) : Rs.73.08/Litre

Post-Increase (From May 24th, 2012) : Rs.81.44/Litre

Increase/Litre : Rs. 8.36/Litre

Is this the highest in the country?

Bangalore is Rs. 82/Lt and there was a time roughly 14years back I have paid Rs. 25/Lt. Where are we headed?

[ravib]

So govt. thinks that those who own petrol vehicles (2W/4W) are rich enough to afford any magnitude of hike and burden them with all partiality. According to them, those who bought petrol vehicles have committed sin :(

[ghodlur]

What puzzles me a lot is there is no reaction from Auto majors in regards to the steep price hike. Dont they realize that they will bear the brunt of this hike in the coming days. Will seriously affect the Monthly sales figures. I am sure they do have enough clout in the central govt to push back this hike or for that matter any hikes. The Auto industry lobby had succeded in delaying the supposed increase in Diesel vehicle tax.