Diesel Price In Cuttack
The diesel price in Cuttack keep changing due to various reasons but an important factor is said to be the “crude oil.” Calculating the retail price for diesel accounts for multiple aspects, and since 75% of the Indian economy depends on import (of crude oil), the market rates turn out to be highly volatile.
The current pricing policies for different petroleum products offered by various OMCs (Oil Marketing Companies) threaten the strong growth of petro-retail sectors and other mounting problems of under-recoveries. These stress the subsidies that are provided by the Indian Government.
|Also Know: Diesel Price in Punjab|
Also, it is observed that petrol and diesel rates have been deregulated since 2010 to a market-decided pricing regime. Therefore, there are no symmetric relationships between the fuel price and crude oil price even after such price deregulations. This indicates that a majority of the Oil Marketing Companies employ not only a similar distribution cost but also a similar profit margin to decide the final price for a dealer.
This article concentrates on the diesel rates in Cuttack and other important factors affecting them. But before that here is an introduction to Cuttack and its economic growth.
Cuttack is not only the second biggest city but also the former capital of the Indian State – Odisha. Otherwise known as the “Sudhama City,” Cuttack features a huge number of businesses and trades. Talking about its economy, it is reported to hold the biggest GDP than other cities in Odisha. It hosts a wide array of industries, which ranges from logistics, steel, and ferrous alloys to agriculture, handicrafts, and textiles.
Factors That Had An Impact On Cuttack’s Economy In The Past
One of the most common factors that affected Cuttack’s overall economy and industrial growth is its “natural calamities.” Droughts, floods, and cyclone are a few major disasters that this economy faces. In fact, it has affected agriculture largely.
What Is Dynamic Fuel Pricing?
When the concept of “dynamic fuel pricing” wasn’t introduced, the prices were updated on a fortnight basis, which was on the first and sixteenth day of every month at 8:00 a.m. IST (Indian Standard Time). This was known as the “fortnight fuel pricing system.” However, this had many drawbacks and there was no transparency.
To overcome all of those, the mechanism of “dynamic fuel pricing” was implemented on June 16, 2017, and is something that most developed nations follow. It helps in revising the diesel rates on an everyday basis in synchronization with:
- International crude oil price
- CER – Currency Exchange Rates
This price revision is done every morning at 6:00 a.m. at Indian Standard Time.
Is Dynamic Fuel Pricing Implemented In Cuttack?
It is important to check the diesel rates every day before filling it at a petrol station. This is because the price that was there yesterday might not be the same today. As far as Cuttack is considered, all diesel pumps follow the mechanism of dynamic fuel pricing. In fact, it is implemented in every region in India.
One of the key reasons “dynamic fuel pricing” was implemented because to bring in more transparency in the system so that governments cannot influence or affect the OMCs (Oil Marketing Companies). Apart from this, the dissimilarities in the Indian Rupee and International Crude Oil Price can be effortlessly transmitted to the consumers. Moreover, dealers will be able to manage their stocks and funds more effectively.
Factors That Affect The Diesel Rates In Cuttack
We often see that the fuel prices in India keep fluctuating on a daily basis. However, there are even times when there is just a sudden hike. Ever wondered why? Why does the Indian Government increase or decrease the diesel prices? Well, one of the common misconceptions is that the governments and the oil marketing companies do this to mint money. However, the fact is that there are various factors associated with fuel that make the prices to go high or low and not many are aware of them.
Keep in mind that duel is one of the most common global commodities and the prices are influenced in one country just because the demand was high somewhere else. Here are few significant factors that affect the fuel rates in India:
1. High Demand
As a rule of thumb, when there is an increased demand for a commodity, the price of it automatically goes up. Therefore, a commodity like diesel is no exception. Diesel costs much lower than petrol and that’s a primary reason it is being used for various things. However, that is also another reason it is utilized by various commuters.
Recently, the sales of diesel-based vehicles increased suddenly in India spiked and this, in turn, increases the demand for diesel too. When this happens, there will be a surge in the prices as well. Take the United States for instance. In the recent years, America saw approximately 40% - 55% of new registrations for diesel vehicles. Similarly, progressing economies such as India and China also demonstrated a considerable upsurge in the total sales of diesel-based vehicles at 30%.
The diesel rates are highly affected by transportation as well. It is the total cost required for covering the distance between a retail center to a supply store. Usually, the places that are located farther from the Gulf Coasts are more likely to have high prices than the ones that are nearby.
3. Climatic Conditions
Climate also plays a key role in how the diesel is being priced. In the summertime, the demand for diesel increases substantially across the globe and the main reason is that people tend to go for vacations. Consequently, the more the people travel (via heavy-duty vehicles, powertrains, airlines, etc.), the need for a fuel like oil will be even higher for sure.
On the other hand, winters also have the same impact. However, this might not apply to India but the demand for diesel is much greater during the cold season, as it is utilized for heaters and heat-based appliances.
4. The Cost Of Crude Oil
The international crude oil price makes up about 71% of the total gasoline price whereas the rest of the amount that a consumer pays at the petrol station depends on the below:
- Refinery cost
- Marketing cost
- Distribution cost
- Marginal profit
These costs stay stable so that the change in the everyday fuel price reflects the crude oil rate fluctuations accurately. The higher the price of crude oil, higher the fuel price. Generally, it takes at least 6 weeks for the changes in the oil price to take effect and reach the pumps. The price of crude oil is more volatile than the gas price.
Since the core component to produce a fuel like diesel is crude oil, even a slight demand or increase/decrease in its price can have a big impact on petroleum products at China, Middle East, and the United States.
Say, for example, a few years ago, America made a decision to employ ULS (Ultra-Low Sulphur) fuel. But the total cost to convert diesel to sulfur fuel is too high and consequently, this factor hikes the diesel rates too.
For instance, about a decade ago, the United States decided to use ULS (Ultra-low Sulphur) fuel. However, the cost to convert diesel to sulfur fuel is extremely high and as a result, it hiked the diesel price.
Does GST Affect The Diesel Rates In Cuttack?
Recently, Dharmendra Pradhan, the Oil Minister of India stated that the GST (Goods and Service Tax) council should consider integrating fuel with GST. But consumers are curious to know if this idea would be considered by the Government of India or not.
Market watchers say that if the Indian government decides to accept this approach and include GST for diesel and petrol, then there will surely be a steep dropdown in the price. Besides this, taxes and duties might also exceed the diesel’s production cost. In addition, the retail price will also incline. As of now, there is no GST being imposed on diesel and petrol in India.
*Disclaimer: BankBazaar makes no guarantee or warranty on the accuracy of the data provided on this page, the prevailing prices are susceptible to change and provided on an as-is basis. We accept no liability for any loss arising from the use of the data contained on this website.