the True Price of fuel - Petrol & Diesel

The price of Oil

the price of crude oil is the most important value on the international commodity market. Crude Oil is the most important commodity and emerging industrial market such as China, India, Latin America greatly influenced the price of oil since they require more and more oil to support their economic growth and resulting rise in energy consumption. the supply of crude oil is limited, however, and cannot be increased further, since it has become increasingly difficult to find and developed new oil reserves in resents years, As a result the price of oil has a Strong influence on international economic development since it is urgently needed in all industrialized countries when supplies are limited

the commodity of crude Oil is by far world's most important energy source and the price of oil therefore plays an important role in industrial and economic development. their are different crude oil. the most important type of crude oil used in Europe is Brent Crude, named after the north sea oilfields whee it is extracted. Brent crude is particularly light crude oil which is cared from north sea to the Sullom Voe terminal on Mainland, Shetland by an underwater pipeline. from their, the crude oil is transported by tankers 

Live Brent Crude Oil Price

In India,

Petrol and Diesel Prices have steadily been increasing after daily price revisions Been - that Fuel Prices in India are excluded from GST Framework by the Government of India, and despite of slight cut in Excise Duty - due to International Crude prices on its recent highs - Petrol and Diesel Prices are also on its peak

as on today (25/4/2019) in Maharashtra petrol is Inr 85.68/Ltr & Diesel is Inr 73.23/ Ltr
the spot rate of crude oil in Mumbai is 4836 Rs / Bbl (per Bbl means per barrel , one barrel equals 42 US gallons)

Some of the Reasons for Price Hike 

1. Hike in Crude Oil Prices from 45$/ Barrel to 79$/ Barrel

2. Increase in Petrol Pump Commissions by almost Rs 1 per Litre in Petrol and Diesel, commission on petrol from Rs 1.499 per litre to Rs 1.799 a litre. The same on diesel has been hiked from 91 paise to Rs 1.09 a litre,

3. Marginal Increase in Profit Margins of OMC, Refinery or will say in Government language as Better Price Discovery as Basic Cost of Fuel after Refinery

4. After Budget 2018 - Government First Slashed Excise Duty on Petrol and Diesel by Rs 2 per Litre and then further by Rs 6 per Litre - but hang on - Road Cess of Rs 8 per Litre been introduced now - effectively means on papers lower Excise Duty is shown but no change in Fuel Prices

The Irony - 

we are paying more taxes rather than the cost of obtaining the fuel 

Calculating crude oil cost - petrol and Diesel 2018

If you reading Internationally, the price of crude Oil hovers at around 71 Dollar and Rupee has also gained Strong in Recent Tines 

On Importing Oil - Barrel Cost + 1.5$ Ocean Freight of needs to be paid - effectively implying - 72.5 $ per barrel as import cost. This is Equivalent to Rs 4930 in INR (keeping exchange rate at Rs. 67.98 / USD + Ocean Freight )

» 1 barrel of crude Oil is Equivalent to around 159 Litres of Crude Oil

» Raw Crude Oil in Indian Currency: Rs. 4930 / 159 = Rs 31 per Litre approx

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 on 20th May 2018, approx cost for Basic OMC Cost calculation

Important note:

The Petrol been Sold in India from End 2017 has 10% of Ethanol been Mixed with Petrol. Been Ethanol is a natural Fuel (as made from Sugar and starch) and very well can be mixed with Petrol without any changes and also has no PM (Particulate Material) Pollution.

However - the catch is Ethanol is priced at just Rs 40.85 per Litre, but is mixed in Petrol and the given rate is combined rate as been sold to consumer

It means that if your car go for petrol Tank Full of say 30 Litres - then in actual your car will get 27 Litre Petrol and 3 Litre Ethanol - but the rate charged would be the price of Petrol only - means you have to pay price of 30 Litre Petrol.

Taxation Scenario on Petrol and Diesel Fuel

Do you always Wondered that Despite of Falling International Crude Oil Costs, Petrol and Diesel Prices in India are on higher Side

Apart from Crude Oil Rates - There are 2 Important Factors which determine the Fuel Cost - VAT and Excise Duty - which is as below

	Tax in November 2014	Tax in August 2017	Tax in May 2018
Excise  Duty on Petrol	Rs 9.20 per Litre	Rs 21.48 per Litre	Rs 19.48 per Litre
Excise  Duty on Diesel	Rs 3.46 per Litre	Rs 17.33 per Litre	Rs 15.33 per Litre
VAT on Basic Price on Petrol	20% on Basic Price	27% on Basic Price	27% on Basic Price
VAT on Basic Price on Diesel	12.5% on Basic Price	16.75% on Diesel + 25p Cess	16.75% on Diesel + 25p Cess

Taxes Paid for Obtaining Fuel 

Below are Taxes Paid for Obtaining Fuel in Delhi (Scenario is not much different in other cities too - almost similar or even higher taxes charged)

	Tax Paid for Obtaining Fuel	Total Cost of Fuel
Petrol in Delhi	Rs 35.69 per Litre (47%)	Rs 76.24 per Litre
Diesel in Delhi	Rs 25.24 per Litre (37%)	Rs 67.54 per Litre

Basis - May 2018 Prices in Delhi

It means for Every Litre of Petrol you are filling -- you are paying a steep tax of Rs 35.69 per Litre in Delhi to State and Central Government. Its even higher in Other cities

If you are Staying in Mumbai - you are paying highest Taxes on Petrol Prices in India. Reason Mumbai has highest State Level Taxes (VAT with additional Surcharge). This takes Taxes (Excise+VAT+Surcharge) in Mumbai to almost Rs 43 per Litre alone in Petrol - taking to almost close to 55% Taxes on Filling a Litre of Petrol

Ps: this could be your reaction after reading next : CONTROL YOURSELF

government can reduce the price

In a series of tweets, the former finance minister said the bonanza to central government is Rs 25 on every litre of petrol and this money rightfully belongs to the average consumer.

Amid rising criticism over steep hike in fuel prices, senior Congress leader P Chidambaram claimed it was possible to cut up to Rs 25 per litre in petrol prices but the government will not do so.

In a series of tweets, the former finance minister said the bonanza to central government is Rs 25 on every litre of petrol and this money rightfully belongs to the average consumer.

"Central government saves Rs 15 on every litre of petrol due to fall in crude oil prices. Central government puts additional tax of Rs 10 on every litre of petrol.

"It is possible to cut up to Rs 25 per litre, but the government will not. They will cheat the people by cutting price by Rs 1 or 2 per litre of petrol," he said on Twitter.