Fuel Subsidies in India

All these gimmicks are just bandages for a man getting sicker. They need to have curbed corruption and increased electricity production to keep the GDP growth on the uptrend. Lack of power is destroying Indias growth. The GDP growth is directly proportional to the amount of electricity produced.

Why India Should Hike Diesel Prices

Why India Should Hike Diesel Prices - International Business Times

Electricity is a very narrow term in its scope. Energy is more appropriate term, would you agree? Nuclear is the only way.

Speaking of energy, the monumental use of diesel for power generation itself shows the pathetic state of energy sector.

Proposal to hike duty on diesel cars on card

New Delhi: Amid widening price difference between petrol and diesel, the Finance Ministry is looking at the possibility of raising excise duty on diesel cars, a suggestion which was mooted long back by the Oil Ministry.

"Hiking excise duty on diesel cars is still on the agenda. It was not taken up during the Budget. It will take some time. It will happen," a Finance Ministry official said.

To discourage consumption of subsidised diesel by personal vehicle owners, the Petroleum Ministry had suggested imposition of higher duty on purchase of diesel cars.

While the Petroleum Ministry has been asking for a hike in the excise duty on diesel cars, the Heavy Industries Ministry is opposing the move.

The Oil Ministry has argued that the additional amount garnered can be used to make good a part of the loss that fuel retailers incur on the sale of diesel at government-controlled rates.

"There are two views to the proposal. We are trying to work out a consensus. The Budget has just passed and any changes could take some time," the source added.

With the recent hike of over Rs 7.50 per litre in petrol prices, the difference between retail prices of petrol and diesel has widened further. While the per litre diesel price in Delhi is around Rs 40, petrol costs as much as Rs 74.

The Kirit Parikh Committee on Energy had also suggested a one-time additional excise duty of Rs 80,000 on diesel cars, arguing that it would offset the higher excise duty on petrol.

Diesel is the most consumed fuel in the country but is sold at a discount to its imported cost. The government is providing a subsidy of Rs 15.35 a litre to oil marketing companies for selling diesel at lower than market rates.

Subsidised diesel is the preferred fuel for the transport sector (both trucks and passenger buses) and is also used in irrigation pumps and other agriculture equipment.

Luxury cars and SUVs also run on diesel and so do power generators at malls and telecom towers.

It has long been argued that the rich should not get subsidised fuel. According to Oil Ministry estimates, 15 percent of diesel consumption is accounted for by personal cars and SUVs.

Finance Minister Pranab Mukherjee in Budget 2012-13 has hiked the excise duties for petrol cars with engines under 1,200 cc and diesel cars with engine capacity under 1,500 cc, but the length exceeding four metres to 24 percent from 22 percent and a fixed duty of Rs 15,000.

Petrol and diesel driven vehicles having length exceeding four metres and engine capacity of over 1,200 cc and 1,500 cc respectively will now be charged with an ad valorem duty of 27 percent, instead of the earlier 22 percent and a fixed duty of Rs 15,000.

PTI

Diesel is the more efficient and hence cleaner fuel. Is there no other way around this problem than an additional excise duty?

Depends upon the type of diesel you use and the type of engine you burn it in. Diesels with low-sulphur content is cleaner, but not the one with high sulphur content. Diesel also needs to be treated before exhaust. BMW diesels use urea based liquid to treat the effluents while VW diesels use a particle remover on their exhausts. Diesel vehicles also need the turbo-charger to get the maximum bang out of the buck.

Moreover, diesel engines are heavier, more expensive, and have costly parts compared to petrol engines. So the government needs to formulate policies if it wants to encourage diesel powered vehicles. In that case, they will have to remove subsidies on diesel and give tax breaks on new or first time diesel vehicle purchase.

How are you going to take care of this?

Indian govt. is the best example among govts. formulating incoherent and myopic economic policies. It is waiting for the diesel car manufacturers and others to do massive investment in the production line so that some years later it can kill their business.

Look at all the recent decisions. You do not increase rail fare for 10 years and then increase steeply in a day. Since Mamta blocked it this year, the bitter pill is now reserved for some other year. Again, if some one ask her which year to do it, you will get no answers. This myopia is startling.

Minor nitpick: It's 8 years, not 10.

Diesel is cleaner than petrol is a subjective statement.

Everything is based on how 'sweet' it is!

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Some facts.

1 barrel of crude oil = 42 US gallons (159 liters or 35 imperial gallons). It produces from about 21 percent to 35 percent of gasoline or petrol, plus many other products such as kerosene, etc.

More detail:

The yield of gasoline from crude oil depends upon the quality of the crude oil ("Crude Type"), and the amount and type of processing at the refinery.

So called "light" crude yields usually more gasoline per barrel than "heavy" crude, for a given amount of refinery processing. That a crude is "sweet" refers to sulphur content, - sweet makes it low sulphur and sour high sulphur, and a "package" to remove sulphur is called a "Crude Sweetener". Producing gasoline involves two steps in the refinery, beside post-processing. First is the distillation of the gasoline stream from the crude, and then the refomation of this to "hike it up". The final refomation is to adjust to the actual "Octane" numbers and add ingredients to make it suited for cars - such as lead in old days, now various alcohols and glycol to achieve the same.

More extensive processing -- cracking, reformation, etc. -- can greatly improve yields, but of course, at the cost of the increased processing. Overall, refineries in the USA are yielding about 49% gasoline (20.5 gallons) from the mix of crudes they process (2004 data).

Actually, a barrel of oil is 42 gallons. When the barrel is processed, you may get something like 15 gallons of gasoline, 9 gal. of fuel oil (See Gasoil / D2), 10 gal. of jet fuel (Kerosene) and 4 gal of other "heavy" products such as lubricants, grease, asphalt / bitumene and plastics and 4 gallons of lighter condensates/naphtha.

In energy equivalents, 1 barrel=42 u.s. gallons of oil is estimated to be around 19.5 u.s. gallons of gas (natural gas).

Not disputing the answer at all, but if crude is now $80 per barrel, this should make gasoline nearly $1,90 per gallon, and this without refining and transport costs and assumes that the other cuts of the crude can be sold to the same price!


Depending on where you are the response varies. When oil is refined, there are number of products that will result from the refining process, including gas, diesel, and other products. Depending on the "feedstock" of the refinary and what production goals were in mind in constructing the refinary, the output of gasoline, diesel, and other products varies. For example, in the US, the refinaries are aimed at maximum output of gasoline, so the crude types that are used produce about 2 liters of oil to process about 1 liter of gasoline. Change this, say use Canadian tar sand instead - and you will need 4 times the quantity of crude for the same amoiunt of gasoline. In EU however, more crude types are used, and the gasoline cut differs, i.e. 1.5 to 3.0 liters. That a refinary process heavy crudes will usually result in a good supply to the chemical industry of complex hydro-carbons that can be used to make e.g. kevlar, resins for glue and fibre-glass, and advance plastics. These plants will pay well for the chemicals, so operating a refinery is managing a complex equation. You may have a good agreement for producing the complex chemicals, there is a good market with a predicable price for gasoline, heating oil and jetfuel / kerosene - while the residue, huge amounts of bitumene or tar can only be sold at a low price as road and roof covering.

Answer

In a barrel of crude you need to divide it into separate parts. These parts are roughly:

Naphta and other condensates that has remained liquid.
Kerosene, where most is jet-fuel
Unleaded gasoline
Diesel fuel and heating/furnace oil
Engine oil
Gear oil
Grease
Tar/asphalt


So in a 55 gallon drum of crude you can see that a small percentage actually becomes gasoline. The exact number depends on the crude type but I hope this gives you a better idea.

The standard barrel of crude oil or other petroleum product (abbreviated BBL) is 42 US gallons (34.972 Imperial gallons or 158.987 L)- In short 158.987 litres of crude oil make 1 barrel. To the ISO system - the oil companies and surveyors use 7.3 BBL per MT, and 304 gallons (GLN) per MT - regardless of product and specific weight.

Read more: How much gasoline can be made from one barrel of crude oil

Many of our friends have been trying to justify that the high food prices in India is a global phenomenon, but this article brings out the true picture- we are to blame for our own mess and we should not blame others for our faults.

Most of the Diesel cars being sold are under 1200 CC, which will escape the high tax. So shat does the Govt. end up doing. It is a tang dance where you go one step forward and two steps back.

Also Diesel is more fule efficient than petrol, so shouldn't the Govt. be encouraging people to use more of diesel than the inefficient petrol

Petrol prices in India are costlier than the United States but cheaper than European countries, Minister of State for Petroleum and Natural Gas R P N Singh said on Tuesday.

Petrol in Delhi is priced at Rs 63.70 a litre, while the same in the USA is priced at Rs 42.82 per litre.

The price in India is more than any of its neighbours -- Pakistan (Rs 41.81 a litre), Sri Lanka (Rs 50.30 per litre), Bangladesh (Rs 44.80 a litre) and Nepal (Rs 63.24 per litre).

Now think what we have we to do?