Re: Petrol price increased by Rs3.14 per litre.
With regards to a detailed breakup, its posted on team-bhp: Fuel Pricing in India. Detailed Robbery Analysis. - Team-BHP
As for having a perpetually higher petrol price, wouldn't this become a self defeating prophecy over time? Simple demand and supply analysis says that as the differential between petrol and diesel keeps rising, the break even point because of the excess cost of a diesel car would keep falling because of which the government's revenue from petrol would fall and the bill on diesel subsidy would rise ultimately screwing the government.
For example, taking the Ford Figo. According to carwale.com, the mileage of the petrol version is 11 and the diesel version is 14.7. The price of that petrol model is 4,13,000 and the diesel is 5,04,000. Considering a fuel price of Rs. 69 for petrol and Rs. 41 for diesel would translate to a running cost of 6.27 Rs./Km. for the Petrol and 2.79 Rs./Km. for the Diesel version. That's a difference of Rs.3.48/Km. which means that the additional upfront cost of 91,000 Rs. for the diesel version would be recovered in only 26,000Km.
If the same trend continues and the price of petrol is 89 Rs. after say 2 years, then this break-even point would fall to merely 17,000Km so the people whose car usage would be between 17-26000km would switch to diesel vehicles, governments subsidy bill goes up, they make petrol more expensive,even more people switch to diesel, they increase price of petrol further and this vicious cycle continues.
Unfortunate that no one in the government realizes this.
Aces170 said:
With regards to a detailed breakup, its posted on team-bhp: Fuel Pricing in India. Detailed Robbery Analysis. - Team-BHP
As for having a perpetually higher petrol price, wouldn't this become a self defeating prophecy over time? Simple demand and supply analysis says that as the differential between petrol and diesel keeps rising, the break even point because of the excess cost of a diesel car would keep falling because of which the government's revenue from petrol would fall and the bill on diesel subsidy would rise ultimately screwing the government.
For example, taking the Ford Figo. According to carwale.com, the mileage of the petrol version is 11 and the diesel version is 14.7. The price of that petrol model is 4,13,000 and the diesel is 5,04,000. Considering a fuel price of Rs. 69 for petrol and Rs. 41 for diesel would translate to a running cost of 6.27 Rs./Km. for the Petrol and 2.79 Rs./Km. for the Diesel version. That's a difference of Rs.3.48/Km. which means that the additional upfront cost of 91,000 Rs. for the diesel version would be recovered in only 26,000Km.
If the same trend continues and the price of petrol is 89 Rs. after say 2 years, then this break-even point would fall to merely 17,000Km so the people whose car usage would be between 17-26000km would switch to diesel vehicles, governments subsidy bill goes up, they make petrol more expensive,even more people switch to diesel, they increase price of petrol further and this vicious cycle continues.
Unfortunate that no one in the government realizes this.
As I said earlier, I am pretty sure we will see some sort of additional tax/duty on diesel car.
