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Fueling Up

Discussions between the diesel and petrol powered cars are unending along with limitless hike of fuel prices seen in our country almost every month. Diesel prices will be increased every month by 40-50 paise per litre until and unless the losses on the diesel fuel are completely covered. The oil ministry has recently decided to remove restrictions on diesel prices from state control and gave authority to state-owned oil companies to raise diesel prices in small amounts every month till they cover their losses.

Currently, diesel is being sold at a loss of more than Rs. 10.80 per litre. Oil companies have increased diesel prices by 45 paise on 17th January, which comes up to a total cost of Rs. 47.65 per litre in Delhi. According to the Oil Minister, M Veerappa Moily, the oil marketing companies can hike diesel prices by 40-50 paise every month until further orders. Along with de-regulation, the ministry will ask bulk consumers like state transport undertakings, defence and railways to pay almost Rs. 10 more per litre than the retail price in order to save around Rs. 12,907/- crore in annual subsidy.

Moily also added that states like Gujarat and Tamil Nadu are asking their public transport fleet to re-fuel diesel at petrol pumps instead of buying diesel from oil companies directly, which is avoiding the payment of the market price compulsory for them, instead the states should reduce VAT on diesel to cut prices. This move by the ministry will affect the sales of vehicles and automobile manufacturers are also likely to get stuck in a big confusion whether to invest on diesel powerplants or petrol engines.

Diesel Fuel Lid

Comments on this entry are closed.

  • No One

    Doesn’t justify the implication it will have in prices of every thing that we have to buy for living.

    Salary is not getting increased for anyone in that aspect.

    Hike in one sector, that is diesel will reflect hike in any single commodity, meaning expense on us would be 100 times higher than what gov had to pay for subsidy if calculated nation wide expense increase for everyone.

  • antony

    @ No One, I see a pattern in the price rise, its not jsut the price that is going up, but the profit margin too. The same samosa i used to eat for 3 rupees 5 years back costs 10 rupees now. Now even assuming that a samosa is made entirely of petrol and lpg(worst case), and even if the the petrol price jumped from say 30 rupees 5 years back to say 90, When the samosa price trippled, so did his profit(which still remains x % of the MRP of his samosa).

    People are just making the fule price as an excuse to better their way of living, earn more. As long as demand exists for Samosa, i dont see how that is wrong.

    • No One

      In example for Samosa, well he had to increase it triple as he needs 15 commodity to make a samosa and increase in diesel will effect price of that 15 commodity to go up.

      So just increasing price in ratio of fuel wont help that samosa guy to maintain his profit margin

      One has to calculate his own expense also, since back home to run family I (suppose I am a samosa guy) would need 150 daily commodity, and price hike in diesel will effect price of those 150 commodity also.

      So over all, my expense will increase at a lot higher ratio compare to a mere figure of 50p of diesel increase since all those 150 commodity makers too will follow this same line since their making costing is also increase not just for their transportation cost but also for those raw materiel they need to make those 150 commodity !!!

      This effect grows in a chain reaction !!!

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