I knew it is a hot topic since everyday government and oil companies throwing fire on common men's mind by quoting crude oil price and removal or restriction of subsidy on petroleum products. The latest news is withdrawal of subsidy which is using for motor cars and other private purposes. But the government wont forget that there are some people, they don't have a two wheeler and uses taxi cars for their unavoidable situations such as hospital etc. People protests against each price hike but it ends in the magnified mathematics (playing with maths) of union petroleum minister or finance minister.In this discussion I'm pointing out certain facts which cleverly hiding from people by these companies.
It is an acceptable fact that the neither the oil companies nor the govt giving open data to public or even to financial experts regarding the crude oil price calculation. Oil companies jointly fixes a price and submitting to government. Also govt approves it. The hidden secrets are,
- The effective(Actual) crude oil price is different from govt publishing rate.
It is a fact that India importing petroleum to fulfill her oil needs. But how much?
70% of total need. ie, 30 % is fulfilling from our own source (Indian Basket).
We are importing petroleum of two grades viz, Dubai-Oman grade (67.6% of import) and Brent grade (32.4%)
(Nb:It is grading system and doesn't containing the meaning that it is importing from Dubai or Oman)
Then all these grades have same price?
No.Its not possible. Indian basket is the cheapest one. Oman-Dubai grade will be costlier than Indian basket but cheaper than Brent grade.
Govt normally publishing price of Brent grade crude oil as International price.But the fact is it represents the price of only 22.68% of total crude oil and remaining 77.32% of total crude is available to our companies at a lower price rate.
Another fact is India has long term agreement with oil exporting countries (Eg: Iran).
From this countries India importing a standard quantity of oil at a predetermined price regularly. This standard quantity has a relation to India's base oil needs. The remaining quantity is buying from International market with price bargaining.
So the International price directly affects only a portion of our import.
- High tax rate
The image clearly shows the effect of different factors in fuel price of US and India. In India about 58% of overall fuel cost is tax while in us the tax is only 36% of overall price.
From the website of Indian Oil Corporation highest crude oil price is 116.89$ (for one barrel). Let us take exchange rate as 1$=44 INR.Here we are taking the price of Brent grade.
1 barrel=42gallon=158.76litr
for 1 barrel, it is 116.89$ so for 1 litr it is 32.396 INR
But the price of gasoline in this July was Rs 68.62.According to various oil field experts the refining cost of gasoline is below 1rs/litr. Then how the selling price became even double the row value? This comes from the contribution of excise duty,educational sess,dealer commission (rs 1.05/litr),state tax, customs duty and Transportation charge(rs-max 6/litr).
Then the word loss means?
Loss means loss in profit or decrease in expected profit. It will be a joke if our public sector companies are working only for making huge profit. Their capital investment is our tax. So everyone of us is a share holder of these companies.Now these companies giving huge price hike as return to us .
From the website of Indian Oil Corporation highest crude oil price is 116.89$ (for one barrel). Let us take exchange rate as 1$=44 INR.Here we are taking the price of Brent grade.
1 barrel=42gallon=158.76litr
for 1 barrel, it is 116.89$ so for 1 litr it is 32.396 INR
But the price of gasoline in this July was Rs 68.62.According to various oil field experts the refining cost of gasoline is below 1rs/litr. Then how the selling price became even double the row value? This comes from the contribution of excise duty,educational sess,dealer commission (rs 1.05/litr),state tax, customs duty and Transportation charge(rs-max 6/litr).
- Whether our oil companies are in huge loss?
Then the word loss means?
Loss means loss in profit or decrease in expected profit. It will be a joke if our public sector companies are working only for making huge profit. Their capital investment is our tax. So everyone of us is a share holder of these companies.Now these companies giving huge price hike as return to us .
Whether it is acceptable?
?
?
?
Please share your views....
