Even as the international crude oil prices have slumped by over 60% since past 1 year, there has been no corresponding decline in petrol and diesel prices in India and consumers are not enjoying the full benefits of cheaper crude oil prices.
Petrol prices in the country have come down by just 20% to Rs. 60 per litre in December 2015 as compared to Rs. 75 per litre in June 2014. In the same period, Brent crude oil prices have declined from above $110 per barrel to $44 a barrel.
There are two big reasons why the drop in petrol and diesel prices has not kept pace with the crash in global crude prices.
• Rupee Depreciation: India imports nearly 80 per cent of its energy needs, so the exchange rate plays a huge role in determining the landed cost of fuel. In June 2014, the rupee traded around 60 per dollar, but the currency has steadily depreciated to a two-year low of around 67 per dollar over the last 18 months. The weakness in the rupee increases the landing cost of crude in India.
• Excise Duties & Taxes: The excise duty on diesel was Rs. 3.65 per litre in April, 2014 which after five rounds of excise duty hikes has risen to Rs. 10.66. Excise duty on petrol has increased by almost Rs. 10 in the last 18 months.
Variation in Fuel Prices
Here we try to analyze the variation of petrol prices in Delhi and correlate the same with prevailing crude prices globally. Looking at the two graphs show stark findings. The overall trend between Prices in Delhi followed similar patterns till about Mar’15, post which the prices in India have stopped mimicking global crude prices. The prices in India have remained abnormally high compared to global trends.
The graph below shows the variation in Petrol prices in Delhi in the last 2.5 years.
Cost Break Up of Petrol
A litre of petrol in Delhi costs Rs. 60.5. Nearly a third of this is made up of excise duty. Local States Taxes forms about 20% of the final prices. The cost of producing petrol is just Rs. 24 per litre but after adding company margin, petrol pump dealer commission and taxes, it sells for Rs. 60.5.
Cost Break Up of Diesel
The cost of production of diesel is only Rs. 25 per litre. Rs. 7.0 is added on account of VAT. Another Rs. 10.6 is added on the account of Excise duties. Rest is the attributed to dealer commissions and company margins.
This article is an informational article and is not intended to question any policy decisions. We would like our readers to share the same with their knowns so that they can know if the fuel prices are low or is our Govt. using the falling fuel prices as a bait to fill up state coffers by raising taxes and duties.
Stay Tuned.
Pitcrew Team
Pitcrew is a Car Servicing Startup in India. Book a car service from authorized service centers or a fulfilled by Pitcrew network online or through our mobile app
Website: www.pitcrew.co.in
Download App: www.pitcrew.co.in/app
We Can supply Aviation Kerosene,Jet fuel (JP 54-A1,5), Diesel (Gas Oil) and Fuel Oil D2, D6,ETC in FOB/Rotterdam only, serious buyer should contact or if you have serious buyers my seller is ready to close this deal fast contact us below:now base email us (neftegazagent@yandex.ru)
PRODUCT AVAILABLE IN ROTTERDAM/ CI DIP AND PAY IN SELLER EX-SHORE TANK.
Russia D2 50,000-150,000 Metric Tons FOB Rotterdam Port.
JP54 5000,000 Barrels per Month FOB Rotterdam.
JA1 Jet Fuel 10,000,000 Barrels FOB Rotterdam.
D6 Virgin Fuel Oil 800,000,000 Gallon FOB Rotterdam.
E-mail: neftegazagent@yandex.ru
E: neftegazagent@mail.ru
E: neftegazagent@yahoo.com
Best Regards
(Mr.) Vladislav Yakov
Skype: neftegazagent
Thank You
I am a Broker to a Direct Mandate working with a reputable refinery, and we are to you, esteem buyers that the petroleum products you are looking for is available in our Tanks and Reservoir for immedaite lift and supply.