Petrol Politcs: Why is Petrol So expensive in India ?

As we gasp to catch up with rising petrol price, there may be further hike in future too. Government explains that even after Rs.5 hike per liter of petrol, Oil Marketing companies are still at a loss of Rs.5.5 Per letter.

Before justifying the price hike, let us break up the current price of Petrol:

One Barrel of Crude oil cost you US$ 112.50
At Rs.45 per dollar, Cost / Barrel = Rs.5062.5
One Barrel of Crude Oil = 158.76 liters of Crude Oil.
So One liter of Crude Oil = Rs.31. 88.

Refining cost = 52 paise per litre.
Capital Cost of Refinery = Rs.6
Cost of Tranportation = Rs.6
Dealer's commission = Rs.1.05.

So, adding all that, the price of petrol comes to about Rs 45.46 per litre.
But how much are we actually paying for petrol?
Rs 68.3 in Mumbai,
Rs 63.4 in New Delhi,
Rs 71 in Bangalore
Rs 67.22 in Chennai

Why are we paying so much more and to whom?
The answer is tax.
Not many are aware about the huge quantum of central and state government taxes and duties levied on fuel prices. In some states the tax component is pretty close to 50%. To add to that, these taxes are levied as a percentage of the basic price of the fuel and aren't fixed per litre. That means rising fuel prices only add more to the government's kitty.

But all we hear about are the huge subsidies and the bleeding OMCs !!!

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