Fuel Price in India Today

Factors Impacting Petrol Prices

1. Cost of Raw Petroleum

The Increment in raw petroleum costs in the worldwide market is one critical figure in charge of increment in petrol prices in Indian household market.

2. Increase in Demand

Petrol prices in India have elevated in response to healthy economics of the country and other emerging Asian countries.

3. Misalignment between Demand and Supply

Indian oil organizations confront issue to reach the petroleum demand with deficiency of supply and production from refinery centers. Petrol prices shall vary in case there is a misalignment between supply and demand.

4. Tax

The tax structure for petrol and petroleum products is governed by the Indian government. Oil companies in India will hike fuel prices to recoup losses when there is a jump in tax rate. When the state government increases the VAT on petrol, petrol rates shall increase. If the state government taxes are reduced, petrol rates shall decrease.

Also check :  Petrol Price in Chennai

Factors Determining Petrol Price at Bunks

1. Seasonal Variations

North American petroleum segment has two as opposed to four seasons: the summer season and the winter season. Extracting fuel will vary in view of the season. By and large, refiners take the benefit of the shift in seasons for maintenance that leads to sluggish fabrication activities. As a result, petro prices at bunks shall be augmented.

2. Weather Conditions

A sea tempest in the Gulf of Mexico that pulverizes oil amenities has prompt outcomes. Less oil shall be extricated if penetrating apparatuses are pulverized. In addition to this, if transportation or refineries are interrupted, there shall be less polished gasoline accessible. In this way, petrol rates are impacted.

3. Increase in Demand

The price of a particular product tends to increase when it is in deficit supply but has more demand. For oil, this is valid across the globe, especially in developing economies like India and China. As a general rule, the higher demand for petrol, the higher shall be petrol prices. The lesser the demand for petrol, the lesser shall be petrol prices.

4. Global Reserves and Production Conditions

The projection with respect to the conditions of polished gasoline surpluses and oil seldom incite dread of a conceivable product shortfall. As polished gasoline and oil are traded on the stock exchange, the slenderest concern leads to raised prices. Simply the dread of not having the desired level of oil results in increased price.

5. Restricted Refining Capabilities

In the course of recent decades, a few refineries in North America have shut because of high running expenses. Any misalignment between refineries and oil fabrication can cause a hike in the price structure of polished gasoline.

6. Debasement of the US Dollar

Refined gasoline and raw petroleum are traded in US dollars. At the point when the US dollar devalues, makers tweak their prices to evade losses.

Dynamic Fuel Pricing or Daily Revision of Fuel Pricing

Indian oil marketing companies used to revise diesel and petrol prices on a fortnightly basis, which means on the first and sixteenth of each month. The retail selling price of diesel and petrol shall be revised on a daily basis in dynamic fuel pricing. The scheme has been brought into action on 16th June 2017. It is in place in five cities of the country, including Udaipur, Visakhapatnam, Chandigarh, Jamshedpur, Puducherry since 1st May, 2017.

Dynamic Fuel Pricing is also called daily revision of Diesel Prices and petrol prices. The move assures that the advantage of even a minute variation in global oil prices may be transmitted to fuel users and dealers. Fuel users shall be mapped to market rates. Revising Diesel Price and petrol prices on a daily basis fosters transparency, encourages the automation drive of dealers, and boosts appropriate stock management practices.

Impact of Dynamic Fuel Pricing in India

The Indian government has permitted oil marketing companies to determine the retail price of fuel based on currency exchange rate and fluctuations in international oil prices. OMCs are owned by states. Hence, they are not permitted to hike fuel prices during the election time since it harms consumers. The government instead permits them to price more even if global oil prices are falling. Revising fuel prices on a daily basis leaves no impact to consumers as global oil prices shall not change much on a daily basis. Fuel prices in India are largely affected if there is a major global event affecting crude oil price.

Countrywide Petrol Price Comparison

India has restricted petroleum surpluses. The country’s oil consumption is mounting at a decent rate as per recent statistics. Other largest oil consumers are Japan, South Korea, Russia, Mexico, Germany, Canada, China. Despite currencies, the factors influencing petrol pricing are more or less the same, but the percentage of allocation will vary from one nation to another.

India is an agricultural-oriented nation and seeks to harness the economy through higher diesel subsidies. Due to which, diesel is priced lower than petrol. This may not be the case with some other economies. Moreover, every country has different importing patterns that will influence Petrol Price. A country with a lower import rate has a lower price charged for both diesel and petrol.

Oil marketing corporations have revised the additional tax remitted towards several state taxes. This has prompted costs of oil-based commodities expanding in states, for example, West Bengal, Gujarat, Karnataka, Maharashtra,Mumbai, Assam. The Irrecoverable Taxes Compensation Scheme of 2002 was needed to be audited to mirror the costs in states where irreversible duties had seen a decay.

INR/USD Exchange Rate

The INR/USD is one of the highly volatile currency pairs traded in the Forex market. The INR is the domestic currency of India whereas the USD is the currency of the US. The USD is considered as the base currency in overseas markets. The INR can be symolised as Rs or IRs whereas the American dollar can be symbolised as $. The Indian currency is clustered into 100 paise. Conversely, the USD is clustered into 100 cents. The exchange rate of INR/USD plays an important role in overseas transactions, including import and export of crude oil. Crude oil should be paid in dollars since it is not a domestic commodity.

An exchange rate is a rate at which the currency of one country is converted into the currency of another currency. It might change on a daily basis with the steadily changing market conditions. Similarly, the INR/USD exchange rate is influenced by many factors. The common influencers include the rate of interest, the rate of inflation, the current account of India and the USA, the terms of trades, speculation, recession, the political stability of India and the USA, etc.

Crude Oil

Crude oil, also called black gold, is a naturally available raw petroleum derivative made out of hydrocarbon stores in natural underground repositories. It can fluctuate in color to several shades of yellow and black based on its hydrocarbon blend and stays fluid at a temperature and climatic weight. Crude oil, also called raw petroleum, can be turned into usable petroleum derivatives like diesel, gasoline, several categories of petrochemicals.

Transacting in raw petroleum has continuously been immaculate on a global scale though it is delivered by a few corporations. Intermediaries supply up to 80% of worldwide raw petroleum in extensive carriers and a major portion of remaining via underground pipelines. The Middle East retains a bigger margin of surpluses followed by Europe, North America, Eurasia. It is extremely important for business partners such as exporters, subject matter experts (SMEs), intermediaries, manufacturers to wisely handle the element of risk involved while dealing in crude oil.

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Crude oil market influencers

1. Universal geopolitics
2. Weather reports
3. Refinery consumption ratio
4. OPEC surge
5. Speculation in selling and buying
6. Consumption and demand pattern for oil in emerging economies

Crude Oil Primary Categories

A few people self-assertively consider oil to be a solitary, indistinctly identical material with no exceptional separation, but this is really not the situation by any means! Undeniably, it has many categories and goes in thickness and constancy, from unstable variability, light heaviness and thin to a greater degree of thickness. There is an enormous degree of shading additionally. Petroleum sector uses references to topographical localities keeping in mind the end goal to unmistakably group raw petroleum. It can be accredited to the fact that oil from various topographical areas shall normally have its own attributes. These oils fluctuate significantly from each other with regards to their consistency, unpredictability, poisonous quality.

1.Light distills consist petroleum ether, jet fuel, petroleum spirit, kerosene, petroleum naphtha, gasoline, heavy virgin naphtha, light virgin naphtha. These can vanish in a day or two and are highly explosive in nature.

2.Middle distills consist light crude marine gas oils, most domestic fuels, diesel fuel oils, grade 1 and 2. This category is reasonably unpredictable and adequately dangerous.

3.Medium oil constitutes a major proportion of raw petroleum available nowadays.

4.Heavy fuel oils consist heavy marine fuels, intermediate, overwhelming unrefined oils, grade 3, 4, 5 and 6 fuel oils. This group can moderately vanish and, however, harmfulness is exceedingly expanded.

Also check :  Diesel Price in Hyderabad

Three Important Crude Oil Categories often seen in News

1.West Texas Intermediate (WTI) is a premier quality unrefined oil and highly treasured.

2.Brent Blend is a composition of various oil from 15 turfs across the Ninian systems and Scottish Brent cited in the North Sea.

3.Organization of Petroleum-Exporting Countries (OPEC Basket) is a composition of seven categories of unrefined oil from the Mexican Isthmus, Venezuela, Nigeria, Algeria, Saudi Arabia.

Crude Oil Price Determinants

The biggest factor involved in the retail price of gasoline is the cost of unrefined oil that shall vary seasonably and across all parts of the nation. Both demand and supply side factors determine the price of crude oil. Economic growth at a global level significantly impacts demand pattern. Oil prices are responsive to interruptions in the national and transnational surge of unrefined oil.

The Organisation of the Petroleum Exporting Countries (OPEC) sets a higher fabrication level on its participants to impact oil prices sometimes. The price of gasoline comprises taxes imposed by both state and central governments, refining expenses and profits, selling and distribution expenses. Refining expenses and profits will vary seasonably. The cost price of other elements like ethanol is also included in gasoline prices. Augmented demand in the summer for gasoline leads to higher prices.

Gasoline:

On the basis of octane levels, gasoline is marketed in three categories that include premium, regular, midgrade. A fuel’s octane level alludes to its confrontation to ignition. A higher level octane is said to have less inclined to pre-start and explosion. Premier category of gasoline is more expensive than other grades. Fuel with a higher level of octane is priced more by refineries. The retail price of gasoline involves three important elements, which are taxes, cost of unrefined oil, refining expenses, selling and distribution expenses. All these elements are included in retail prices in addition to the losses and profits of distributors, refiners, sellers, retail store proprietors.

Refined Petroleum Product Categories

Refined petroleum products are extracted from crude oil via processes like proportional purification and catalytic cracking. The physical and chemical features of these products will vary according to the categories of crude oil and successive refining processes.

1.Gasoline is a lightweight petroleum product that surges easily and feasts immediately. It may vanish fully under moderate situations within a few hours.

2.Kerosene is also a lightweight petroleum product that surges easily, feasts instantly, and vanishes quickly.

3.No.2 fuel oil, a lightweight petroleum product, surges easily and feasts instantly.

4.No.4 fuel oil, a medium-weight petroleum product, surges easily and feats instantly.

5.No.5 fuel oil is a medium-weight to heavyweight petroleum product with reasonable flash point and a low instability.

6.No.6 fuel oil is a heavyweight petroleum product that is complicated to pump and necessitates preheating for consumption.

7.Compressed Natural Gas (CNG) may be utilised in lieu of petrol.

8.Liquefied Petroleum Gas (LPG) is a composition of butane and propone.

Technology Breakthrough in Oil and Gas

Over the last decade, oil and natural gas industry has experienced tremendous technology breakthrough in projecting, scouting, and fabricating oil and gas. Technology, which is in use nowadays, covers everything from supercomputers to nanotechnology. Seismic imaging enables drillers to reach gas and oil caught miles undersea and underground. A few technologies that can completely streamline the business of oil and gas are the digital oilfield, 4D seismic technology, the new normal. The digital outfield is a platform that tracks, assesses, and manages all the information sourcing from all across the oilfield. The new normal is used to identify the quantum of natural gas and oil. Petroleum geophysicists and geologists use 4D seismic technology to plot and analyse latent hydrocarbon surpluses. Oil production companies have begun investing to gain the best from these technologies.

Global Oil Projections

A recent study on global oil prices has revealed that there is a considerable amount of uncertainty. The range in which global oil prices either increase or decrease shall be reasonably thicker. There has been a stable, consistent rise from the stance of Indian petrol rates.

Price variations in petrol and diesel affect a majority of Indian population and are vastly debated. Both petrol and diesel are considered strategic commodities that play a significant role in the overall socio-economic growth of a nation. These commodities should be optimally utilised to address uncertainties related to supply that in turn impacts the functioning of any economy.

Refined Petroleum Product Categories

Refined petroleum products are extracted from crude oil via processes like proportional purification and catalytic cracking. The physical and chemical features of these products will vary according to the categories of crude oil and successive refining processes.

1.Gasoline is a lightweight petroleum product that surges easily and feasts immediately. It may vanish fully under moderate situations within a few hours.

2.Kerosene is also a lightweight petroleum product that surges easily, feasts instantly, and vanishes quickly.

3.No.2 fuel oil, a lightweight petroleum product, surges easily and feasts instantly.

4.No.4 fuel oil, a medium-weight petroleum product, surges easily and feats instantly.

5.No.5 fuel oil is a medium-weight to heavyweight petroleum product with reasonable flash point and a low instability.

6.No.6 fuel oil is a heavyweight petroleum product that is complicated to pump and necessitates preheating for consumption.

7.Compressed Natural Gas (CNG) may be utilised in lieu of petrol.

8.Liquefied Petroleum Gas (LPG) is a composition of butane and propone.

Technology Breakthrough in Oil and Gas

Over the last decade, oil and natural gas industry has experienced tremendous technology breakthrough in projecting, scouting, and fabricating oil and gas. Technology, which is in use nowadays, covers everything from supercomputers to nanotechnology. Seismic imaging enables drillers to reach gas and oil caught miles undersea and underground. A few technologies that can completely streamline the business of oil and gas are the digital oilfield, 4D seismic technology, the new normal. The digital outfield is a platform that tracks, assesses, and manages all the information sourcing from all across the oilfield. The new normal is used to identify the quantum of natural gas and oil. Petroleum geophysicists and geologists use 4D seismic technology to plot and analyse latent hydrocarbon surpluses. Oil production companies have begun investing to gain the best from these technologies.

Global Oil Projections

A recent study on global oil prices has revealed that there is a considerable amount of uncertainty. The range in which global oil prices either increase or decrease shall be reasonably thicker. There has been a stable, consistent rise from the stance of Indian petrol rates.

Price variations in petrol and diesel affect a majority of Indian population and are vastly debated. Both petrol and diesel are considered strategic commodities that play a significant role in the overall socio-economic growth of a nation. These commodities should be optimally utilised to address uncertainties related to supply that in turn impacts the functioning of any economy.

Refined Petroleum Product Categories

Refined petroleum products are extracted from crude oil via processes like proportional purification and catalytic cracking. The physical and chemical features of these products will vary according to the categories of crude oil and successive refining processes.

1.Gasoline is a lightweight petroleum product that surges easily and feasts immediately. It may vanish fully under moderate situations within a few hours.

2.Kerosene is also a lightweight petroleum product that surges easily, feasts instantly, and vanishes quickly.

3.No.2 fuel oil, a lightweight petroleum product, surges easily and feasts instantly.

4.No.4 fuel oil, a medium-weight petroleum product, surges easily and feats instantly.

5.No.5 fuel oil is a medium-weight to heavyweight petroleum product with reasonable flash point and a low instability.

6.No.6 fuel oil is a heavyweight petroleum product that is complicated to pump and necessitates preheating for consumption.

7.Compressed Natural Gas (CNG) may be utilised in lieu of petrol.

8.Liquefied Petroleum Gas (LPG) is a composition of butane and propone.

Technology Breakthrough in Oil and Gas

Over the last decade, oil and natural gas industry has experienced tremendous technology breakthrough in projecting, scouting, and fabricating oil and gas. Technology, which is in use nowadays, covers everything from supercomputers to nanotechnology. Seismic imaging enables drillers to reach gas and oil caught miles undersea and underground. A few technologies that can completely streamline the business of oil and gas are the digital oilfield, 4D seismic technology, the new normal. The digital outfield is a platform that tracks, assesses, and manages all the information sourcing from all across the oilfield. The new normal is used to identify the quantum of natural gas and oil. Petroleum geophysicists and geologists use 4D seismic technology to plot and analyse latent hydrocarbon surpluses. Oil production companies have begun investing to gain the best from these technologies.

Global Oil Projections

A recent study on global oil prices has revealed that there is a considerable amount of uncertainty. The range in which global oil prices either increase or decrease shall be reasonably thicker. There has been a stable, consistent rise from the stance of Indian petrol rates.

Price variations in petrol and diesel affect a majority of Indian population and are vastly debated. Both petrol and diesel are considered strategic commodities that play a significant role in the overall socio-economic growth of a nation. These commodities should be optimally utilised to address uncertainties related to supply that in turn impacts the functioning of any economy.