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Fuel price - Discussion

Discussion in 'Non FIAT Cars and two wheelers' started by basis, Jan 24, 2012.

  1. nkrishnap

    nkrishnap Staff Member Janitor

    Messages:
    1,900
    Bangalore
    Bangalore
    Linea 1.3
    How is the refinery cost arrived at? Is it Index based pricing or cost + markup based pricing. I presume it to be former and hence the higher cost of fuel per litre (ex refinery).
  2. sathishgv

    sathishgv Regolare

    Messages:
    496
    Paradip, odisha
    Grande Punto 1.3 90 HP
    ^^ neither. The prices of petroleum products are derived based on a formula which is given in my previous post. These prices are determined base on two prices as per the international prices. one is the Import parity price(IPP) and the other is the export parity price(EPP). If you would have gone through the link that i have provided you can clearly understand both these terms. so the forumla is 80% of IPP+20% of EXP. This becomes the base price of the products that come out of the refinery to the OMC's and it is called the Refinery Transfer Price (RTP). Add various taxes like Excise tax, education cess (these are all clearly mentioned in the link). Both the IPP and EPP are averaged fortnightly.

    But i don't understand why the prices are calculated based on international prices rather than the usual way of calculating price of any product. I work in a refinery but till now i have not thought about the pricing but the forum has now sowed the seed so let me do some research and try to educate you guys.
    pdash likes this.
  3. nkrishnap

    nkrishnap Staff Member Janitor

    Messages:
    1,900
    Bangalore
    Bangalore
    Linea 1.3
    ^^ The link that you gave does gives the pricing between import and export parity. Since many of the oil procurement contracts are not at the market prices for example Crude from Iran, but fuel cost pricing is done on the market index price. Though not completely following the index based pricing for the end fuel product. This is really big nexus on how the price is computed. If the cost + mark up pricing is done, the refinery price will surely be lot lesser.
  4. sathishgv

    sathishgv Regolare

    Messages:
    496
    Paradip, odisha
    Grande Punto 1.3 90 HP
    ^^That's true but not all the market demand for fuel is supplied by the refiners. Actually a major percent is being imported. So, if we go by the market+cost price which would be less there will be two prices of fuel one costlier and the other cheaper. We cannot control the market as obviously the cheaper fuel will be in demand. That's why the refiners take the Import price as the base and decide the market price
    1 person likes this.
  5. fiat_fan

    fiat_fan Amatore

    Messages:
    185
    Calicut
    Net profit of Indian Oil Corporation declined 35.30% to Rs 9389.85 crore in the quarter ended March 2014 as against Rs 14512.81 crore during the previous quarter ended March 2013. .......
    Indian Oil Corporation net profit declines 35.30% in the March 2014 quarter.......................
    Every oil company is going with descent profit. Still they ask for price hike . They term this as "under recovery " , not loss!!. What they really mean by "under recovery"??

    Mod Note : Please proof read, before posting. Post edited and aligned.
    Last edited by a moderator: Jun 24, 2016
  6. ramjn

    ramjn Staff Member Janitor

    Messages:
    5,243
    Chennai
    Linea 1.3
    Revenue loss. They are not really suffering from the Loss.
    sathishgv and fiat_fan like this.
  7. shams

    shams Esperto

    Messages:
    2,388
    Bangalore
    diesel price has finally been deregulated!
    cheaper by Rs 3.37 in Delhi effective midnight
    sathishgv likes this.
  8. ramjn

    ramjn Staff Member Janitor

    Messages:
    5,243
    Chennai
    Linea 1.3
    Great timing to deregulate the Diesel prices. No one can criticize as the prices would fall (temporarily?) due to deregulation.
    sathishgv likes this.
  9. jumu

    jumu Superiore

    Messages:
    969
    Chennai
    Its quite opposite to how people react in the sock market. When the stock market tanks, all kinds of blame is apportioned and the incumbent govt is blamed. When it goes up , praises are heaped, people are joyed and the ingenuity of the Indian entrepreuner is credited as well as the worlds belief in the Indian economy.. As for diesel and petrol , derugulation that results in the downward revision is great, but any northward movement will mean that the govt is inefficient. Its funny behaviour but we are humans!!:)

    Abdul
  10. pv_krish

    pv_krish Regolare

    Messages:
    418
    Chennai
    Grande Punto 1.3 90 HP
    Deregulation aside, the price drop is due to the decrease in crude oil prices. Do not know how the barrel price came to such levels.

    Coming to deregulation of diesel, Would the inflation not be volatile as many transportation and commodities depend on these. How do the government calculate this when it comes to using them for trains?

    The first impact when it increases would be on the lorries and the commodities because they transport.

    None of the world government want any other alternate mode of fuel to grow and evolve because that hits the respective revenue in the world.
    sathishgv likes this.

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