Petrol prices are revised at 06:00 A.M every day. From June 2017, Petrol prices in India are revised daily, and this is called the dynamic Petrol price method.
In India, the price of petrol is determined by the cost of crude oil in the international market, the exchange rate of the Indian rupee against the US dollar, and the taxes and duties imposed by the government. The price of petrol is reviewed on a daily basis by state-owned oil marketing companies, such as Indian Oil, Bharat Petroleum, and Hindustan Petroleum, and is adjusted according to changes in the above factors.
There are several factors that can affect the price of petrol, including:
Cost of crude oil: The main factor that determines the price of petrol is the cost of crude oil, as petrol is produced by refining crude oil. When the price of crude oil increases, the cost of producing petrol also increases, which can result in an increase in the price of petrol.
Exchange rate: The price of petrol can also be affected by the exchange rate of the local currency against the US dollar, as the cost of crude oil is denominated in US dollars. When the exchange rate of the local currency weakens against the US dollar, the cost of importing crude oil increases, which can result in an increase in the price of petrol.
Taxes and duties: Governments may impose various taxes and duties on petrol, which can have a significant impact on the retail price of petrol. The taxes and duties may vary from country to country and can be based on a variety of factors, such as the price of petrol, the volume of petrol consumed, and environmental considerations.
Refining and distribution costs: The cost of refining and distributing petrol also affects the price of petrol. These costs may vary depending on the efficiency of the refining process and the distance between the refinery and the markets where the petrol is sold.
Market demand: The demand for petrol can also affect its price. When the demand for petrol is high, the price may increase due to the increased competition for limited supplies. On the other hand, when the demand for petrol is low, the price may decrease.
Political and economic instability: Political and economic instability in countries that are major producers of crude oil or major transit routes for crude oil can also affect the price of petrol. For example, conflicts or unrest in countries such as Iraq, Venezuela, or Russia can disrupt the supply of crude oil and lead to an increase in the price of petrol.
The price of petrol (or gasoline, as it is known in some countries) varies widely among different countries due to a variety of factors, including the cost of crude oil, the exchange rate of the local currency against the US dollar, taxes and duties imposed by the government, and the level of refining and distribution costs.
In general, the price of petrol tends to be lower in countries that are major producers of oil, as they have access to a cheaper source of crude oil. The price of petrol is also affected by the level of taxes and duties imposed by the government. Countries with higher taxes on petrol tend to have higher prices at the pump. Finally, the level of competition in the market can also impact the price of petrol. In countries with a high level of competition among fuel retailers, prices tend to be lower.
The retail price of petrol is determined by the cost of crude oil, the exchange rate of the local currency against the US dollar, taxes and duties imposed by the government, and the level of refining and distribution costs. To calculate the retail price of petrol, the following formula can be used:
Retail price of petrol = Cost of crude oil + Refining and distribution costs + Taxes and duties
The cost of crude oil is the main factor that determines the price of petrol. It is the price that oil companies pay for crude oil in the international market, which is denominated in US dollars. The exchange rate of the local currency against the US dollar can also affect the cost of crude oil, as it determines the cost of importing crude oil into the country.
Refining and distribution costs refer to the costs incurred by oil companies in refining crude oil into petrol and distributing it to petrol stations. These costs vary among different countries and can be influenced by factors such as the efficiency of the refining process and the distance between the refinery and the petrol stations.
Taxes and duties are charges imposed by the government on petrol and other fuels. These can include excise duties, value-added taxes, and other taxes and duties that are specific to the country. The level of taxes and duties can have a significant impact on the retail price of petrol, as they can account for a large portion of the final price.
To calculate the retail price of petrol, you will need to know the current cost of crude oil, the exchange rate of the local currency against the US dollar, the refining and distribution costs, and the taxes and duties that are applicable.
India is a major importer of crude oil and petroleum products, such as petrol, diesel, and cooking gas. According to the Ministry of Petroleum and Natural Gas, India's crude oil imports in 2020-2021 were valued at around INR 8.2 trillion (about $112 billion), while its imports of petroleum products were valued at around INR 5.2 trillion (about $72 billion).
According to data from the ministry, India imported around 215 million metric tons of crude oil in 2020, which accounted for more than 80% of its domestic consumption.
India imports crude oil and petroleum products from a range of countries, with the largest sources being the Middle East, Africa, and Latin America. In recent years, India has been trying to diversify its sources of crude oil and petroleum products to reduce its dependence on a single supplier or region.
In addition to crude oil, India also imports a significant volume of other petroleum products, including petrol. The majority of India's petrol imports come from Singapore and the United Arab Emirates. The imports of petrol are typically used to meet the demand in specific regions of the country where the domestic production is insufficient to meet the demand.
India's imports of crude oil and petroleum products have been increasing in recent years due to a growing demand for these products in the country. India has limited domestic production of oil and natural gas, and therefore relies heavily on imports to meet its energy needs.
Bringing petrol under the GST would effectively mean reducing taxes on it. The highest tax slab under the GST is 28%, while fuels such as petrol and diesel are taxed at more than 100% as of now.
To understand the politics of taxation of petrol and diesel between the center and the state, we need to understand the difference between the taxation mechanisms of the two.
The Central government taxes the fuels at a specific rate using various duties and cess while states use a combination of specific and ad- Valorem rates to tax the fuels. Center shares 41% of its collection with states while states add the whole collection to their respective exchequer.
Both, the Central government, as well as the state governments, do not want to compromise with the present tax collection from petrol and diesel since they form a large part of the state revenue. In addition to that, states do not want the center to hold sole power over the decision of tax rates of petrol and diesel since in the present tax regime they enjoy the benefit of a dynamic rate giving them the liberty to adjust their collection.
