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Saturday, March 2, 2013

another petrol hike... not a Budget effect though !!


The Budget of PC failed to enthuse the common man…   many of us would have missed this news item….. Finance Minister P. Chidambaram in end Feb 13,  said that while the Government was open to suggestions on dual pricing for diesel, it would be difficult to charge a market price for luxury cars and subsidised price for transport trucks at the same petrol pump. “We have knocked our heads together to see if it is possible to have dual prices of diesel at the same retail petrol pump outlet,” he said replying to supplementaries during Question Hour in the Rajya Sabha.

Q : Why do oil companies follow each other's price increases so quickly? Do you talk to each other? No. XXX never discusses petrol pricing with our competitors. Not only is it illegal and unethical, we have no desire to give away commercially sensitive information to our rivals. The reason that price increases are usually quickly followed by competitors is that oil companies  sell similar products and have similar costs.

The reaction of common man used to be to fill up his tank of 2 wheeler the day before the budget, thinking that he is making a fortune by saving the price increase…………..  recently, the Petroleum and Natural Gas Ministry introduced market rates for bulk diesel consumers last month, raising the price of diesel by Rs. 10 per litre for bulk consumers. The Finance Minister said central taxes on petrol and diesel had come down between 2007 and 2012. Central excise duty on petrol had come down from Rs. 14.66 a litre (as on March 1, 2007) to Rs. 9.46 (as on September 14, 2012), while the same on diesel had declined from Rs. 4.69 a litre to Rs. 3.56 per litre. but somehow, everytime you go to the petrol pump and fill up for Rs.1000/- the quantity dispensed only gets lower and lower, how ? only FM can explain.

Today’s headline news is that Petrol price is hiked by Rs. 1.40 per litre, the second big increase in rates in as many weeks. A rise in international oil prices and depreciation in rupee have necessitated a Rs. 1.40 per litre increase in price of petrol with effect from Friday [1st Mar 13] midnight, said a statement by Indian Oil Corporation (IOC). The hike is excluding local sales tax or VAT and the actual increase in rate for consumers will be higher after including the tax incidence. The previous petrol price hike was Rs. 1.50 a litre excluding VAT on February 16, 2013.

So at Chennai it would be 73.95 per litre, a hike of 1.78; why they never round off it to 74, thereby allowing the Govt to earn the paise difference, would be explained in length bringing International crude oil barrel prices – still, would never be done….. At Delhi, it would be 70.74, while at Kolkatta it is the highest at 78.34.

If you got carried by the Q and Ans at the start of this post, it pertains to BP Newzealand…………………..  No. BP never discusses petrol pricing with our competitors. Not only is it illegal and unethical, we have no desire to give away commercially sensitive information to our rivals.  The reason that price increases are usually quickly followed by competitors is that oil companies in New Zealand sell similar products and have similar costs.

with regards – S. Sampathkumar
2nd Mar 2013

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