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Why are petrol prices not decreased in India when international prices of crude oil are low?
You will be surprised with agony and angry when you come to know that crude oil is costing only Rs. 31 per liter whereas Petrol and diesel are hovering at Rs.76-80 in India. One more fact that many people are not aware is Petrol and Diesel prices change every day based on the International market prices of Crude Oil and Foreign Exchange Rates. Earlier these prices were changed fortnightly i.e. on the 1st and 16th of each month based on the average price of crude oil and foreign exchange rate of the preceding 15 days.
There are many reasons why there is a steep hike in the prices of Petrol and Diesel in the past one year. Such as
Hike in Crude Oil Prices from 45$ / Barrel to 71$ / Barrel (One barrel = 159 ltrs.)
Increase in Petrol Pump Commissions by almost Rs 1 per Litre in Petrol and Diesel
Introduction of Road Cess of Rs 8 per Litre by the Central Government.
If we get into the calculation of Oil prices, here it goes.
Simplified Calculation Chart for Petrol & Diesel Prices in New Delhi - (20th May 2018)
| Petrol Price * | Diesel Price Calculation * | |
| International Price of Crude Oil with Ocean Freight (as on 20th May 2018) | 72.5 $ or Rs 4930 per Barrel | 72.5 $ or Rs 4930 per Barrel |
| 1 Barrel of Crude Oil | 159 Litre | 159 Litre |
| Crude Oil - Cost per Litre | Rs 31 per Litre | Rs 31 per Litre |
| Basic OMC Cost Calculation * | ||
| Entry Tax, Refinery Processing, Landing Cost & Other Operational Costs along with Margins | Rs 2.62 per Litre | Rs 5.91 per Litre |
| OMC Margin, Transportation, Freight cost | Rs 3.31 per Litre | Rs 2.87 per Litre |
| Basic Cost of Fuel after Refining Cost | Rs 36.93 per Litre | Rs 39.78 per Litre |
| Additional: Excise Duty + Road Cess as Charged by Central Government | Rs 19.48 / Litre on Petrol | Rs 15.33 / Lit on Diesel |
| Pricing Charged to Dealers before VAT | Rs 56.41 per Litre | Rs 55.11 per Litre |
| Calculating Dealer Retail Price - Base Location Delhi | ||
| Commission to Petrol Pump Dealers | Rs 3.62 per Litre | Rs 2.52 per Litre |
| Fuel Cost Before VAT (rounded off for approximation) | Rs 60.03 per Litre | Rs 57.63 per Litre |
| Additional:VAT (Varies from State to State - 27% on Petrol & 16.75% on Diesel + 25p as Pollution Cess with Surcharge) | Rs 16.21 / Lit on Petrol | Rs 9.91 / Litre on Diesel |
| Final Retail Price as on 20th May 2018 -(calculation) | Rs 76.24 per Litre | Rs 67.54 per Litre |
* Prices as of 20th May 2018, an approx cost for Basic OMC Cost calculation.
(calculation courtesy - mycarhelpline.com)
I think at least now we understand that we are paying more taxes than the actual price of the oil, and perhaps paying one of the highest prices in the world, more than the USA. If these taxes are minimized, we can go back to the dream world where petrol and diesel would cost Rs.35 - 40. Given the present political conditions, we cannot even dare to dream of that !!
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