[wildsdi5530]

Crude prices are expected to reach $84 by the end of 2015. That is almost double current rates. And I'm sure govt. is never going to give up this excess ₹8 per litre of excise. So fuel prices may be ₹120 petrol and ₹100 diesel in the near future. Remember we have some very smart people in the center now.

[phamilyman]

Originally Posted by wildsdi5530

Crude prices are expected to reach $84 by the end of 2015. That is almost double current rates. And I'm sure govt. is never going to give up this excess ₹8 per litre of excise. So fuel prices may be ₹120 petrol and ₹100 diesel in the near future. Remember we have some very smart people in the center now.

Curious - where'd you get the $84 projection from?

Getting fuel prices to the levels you anticipate so quickly will be political suicide for the current (or any) government! Can you expand on your hypothesis in more detail along with a high level calculation?

[audioholic]

Originally Posted by wildsdi5530

Crude prices are expected to reach $84 by the end of 2015. That is almost double current rates. And I'm sure govt. is never going to give up this excess ₹8 per litre of excise. So fuel prices may be ₹120 petrol and ₹100 diesel in the near future. Remember we have some very smart people in the center now.

If there are really what is called as smart people up there, they would be playing around with taxation to keep prices at acceptable levels. Else as Phamilyman said, it will be suicidal. Current strategy as of now is okay IMO, if not excellent. At least the additional income will improve the picture during this budget.

[stanjohn123]

This is totally unfair by the government , crude oil prices are reducing and rather than making us happy by sticking to their word of letting just oil companies regulate prices , they play spoil sport by increasing excise as much.

Also if they had plans of increasing excise they should have reduced prices by 5-6 rs in the first place. Somehow this has gone under the radar and people have not noticed it. Now once crude oil prices start increasing oil companies will increase the prices above this new excise which will make it unbearable for the common man or all this might be a plan to cut excise later on when crude prices increases so that they can prove to the other political party that a price cut is possible if excise is tricked in this fashion.

[sgiitk]

Originally Posted by wildsdi5530

Crude prices are expected to reach $84 by the end of 2015. That is almost double current rates. And I'm sure govt. is never going to give up this excess ₹8 per litre of excise. So fuel prices may be ₹120 petrol and ₹100 diesel in the near future. Remember we have some very smart people in the center now.

Originally Posted by stanjohn123

This is totally unfair by the government , crude oil prices are reducing and rather than making us happy by sticking to their word of letting just oil companies regulate prices , they play spoil sport by increasing excise as much.

I hope if $84 comes to pass then some excise will be rolled back. As for state VAT I am not that sure.

[adimicra]

Telengana govt increases VAT..so the entire reduction is prices is gobbled by the increase in VAT..so no price change for the end consumer. Why can't the state govt. specify VAT in terms of absolute numbers rather than percentages? Won't it be easier for budgeting and managing the state finances?
All these tactics by the central and state govts are making this deregulation sound like a joke!

[sgiitk]

@adimicra; VAT is normally specified as a percentage, since it is levied on an ad valorem basis. A flat rate cannot achieve that.

[wildsdi5530]

@phamilyman: read it yesterday in this months' money today magazine.
No calculation done by me. Just thought that now with deregulated prices, doubling of crude prices will double fuel cost.

[simplyself]

The increase in VAT by the Centre serves several purposes. Providing additional revenue is the most obvious one. But I believe the second reason is the Government is cushioning itself for the future rise in crude. Consumers, who have become used to higher prices are right now not complaining as the prices fell by almost Rs.10 per litre. In the meantime, I think the Government increased excise of VAT bu the tune of almost Rs.6/ litre. That way the Centre can cushion both the custimers and itself for some time by easing on VAT and not to immediately increase the proces.

[joslicx]

Originally Posted by wildsdi5530

@phamilyman: read it yesterday in this months' money today magazine.
No calculation done by me. Just thought that now with deregulated prices, doubling of crude prices will double fuel cost.

crude is just one of the input costs. You are ignoring other costs like refining, transportation, employee renumerations, loan servicings etc. These are independent of crude prices isint it and generally only go upwards. Hence changes in oil price cannot be proportionate to changes in crude.

And no govt would suddenly allow price to double. That would be political suicide.

[wildsdi5530]

@joslicx: if prices can halve, they can double. We see that in everyday consumables like fruits and vegetables.
And you forgot the most important component - govt KA hissa! That is more than 50% of the price.

[poloman]

People were praising Pakistan government for cutting the fuel prices few pages back. Now please see what is happening there.
http://tribune.com.pk/story/822603/p...till-saturday/

When it comes to the energy crisis, Punjab just cannot catch a break. A cascading series of events over the last few weeks have resulted in a severe shortage of petrol in the province, as well as Khyber-Pakhtunkhwa, over the last three days, resulting in stranded commuters and a sharp slowdown in economic activity. Government officials believe the situation will be resolved by Saturday.

The sharp drop in global oil prices has resulted in a 27% drop in petrol prices in Pakistan so far, resulting in a sharp uptick in demand. “Petrol sales have touched 15,000 tons a day from around 11,000 tons a few months back. No one was anticipating this shift in demand so fast,” said a petroleum ministry official. The main cause: drivers who normally use compressed natural gas (CNG) for fuel shifting to petrol.

For short term gain, even members of learned forums like TBHP keep on ranting for drastic cuts in fuel prices.

[sachinayak]

Originally Posted by poloman

For short term gain, even members of learned forums like TBHP keep on ranting for drastic cuts in fuel prices.

When international crude prices go up, we have to bear with higher prices. Is it so unreasonable to expect lower fuel prices locally when international crude prices have tanked?

If so, government should openly admit that fuel prices are regulated (like many other things). Deregulating fuel prices and not following the same, is plain and simple cheating. Like it or not.

[joslicx]

Originally Posted by wildsdi5530

@joslicx: if prices can halve, they can double. We see that in everyday consumables like fruits and vegetables.
And you forgot the most important component - govt KA hissa! That is more than 50% of the price.

This is arguing just for the sake of it! how on earth are crude and fruits/vegetables similar? we import almost all of our crude but thats not so for fruits/vegetables.

Originally Posted by sachinayak

When international crude prices go up, we have to bear with higher prices. Is it so unreasonable to expect lower fuel prices locally when international crude prices have tanked?

Was the price increase proportionate? Crude had ran from 20 dollars to 140 dollars in a few years ('03 t0 '08) so petrol should have been costing well above 150 rupees but did it? Then it went from 40 dollars (2009) to 120 dollars (2010). I remember in 2009 I was getting petrol for about 45 rupees per liter in Delhi. So did the govt increase it 3x then in line with crude???

the reality is govt absorbed lot of the increase earlier thru subsidies (to the tune of Rs 8 lakh crores for last 10 years, most of it for cheap diesel that is used by rich folks to run their cars and generators). deregulation only means this subsidy is gone. govt cushioned earlier price rise a lot, its only fair they make a bit of money now that there is a chance. who knows where the prices will be next year!

[sachinayak]

Originally Posted by joslicx

the reality is govt absorbed lot of the increase earlier thru subsidies (to the tune of Rs 8 lakh crores for last 10 years, most of it for cheap diesel that is used by rich folks to run their cars and generators). deregulation only means this subsidy is gone. govt cushioned earlier price rise a lot, its only fair they make a bit of money now that there is a chance. who knows where the prices will be next year!

Fuel prices, then, were regulated (and hence subsidized earlier as you rightly pointed out). They are NOT (at least officially) now. I personally have no issues in government regulating fuel pricing, but when the government claims to have deregulated fuel prices I think we are completely justified in expecting them to walk the talk.