Diesel Price in Salem
Diesel price in Salem, one of the largest cities in Tamil Nadu, India, is composed of domestic as well as international components. Diesel price in Salem is updated on a daily basis with respect to international crude oil price and currency exchange rate. The revised price will be updated at all the petrol stations located across the city by 6 a.m. every day. Those who want to check today’s diesel price in Salem can visit respective oil company’s website to find the same.
Diesel price in Salem, just like in any other Indian city is composed of various elements. The price we pay at petrol stations whenever we fill our vehicles is not actually a single component. It is composed of multiple elements that make-up diesel price in India. To understand how diesel is priced in India, one must know the various components involved as well as the factors that affect diesel price in Salem on a daily basis.
|Also Know: Diesel Price in Tamil Nadu|
Various Components Involved in Computing Diesel Price in Salem
Diesel price in Salem is calculated by considering various domestic and international components. The basic component of diesel price is the international crude oil price. The component becomes a major factor because of India imports over 70% of its fuel requirements from other countries.
As crude oil prices are volatile in nature they change on a daily basis based on various factors including demand supply metrics, weather conditions and political stability in oil-producing nations. Though the Indian oil companies purchase oil in bulk, in order to compute everyday diesel price, they consider international crude oil price on a particular day. Hence, any slight change in crude oil price would affect diesel price in Salem.
The second component involved in diesel pricing in Salem is the currency exchange rate. As crude oil trading typically happens in US dollars, the price of each barrel of crude will be converted into Indian rupees for computing diesel price in India.
The domestic components that are involved in diesel pricing include profit margins of Indian oil companies, excise duty levied by the central government, value-added tax charged by respective state governments, and dealers commission.
While the state and central government taxes form a major portion of diesel price in Salem, the other components occupy a minute share.
The central government currently levies an excise duty of Rs.15.33 per litre of diesel sold in the country, while the state government of Salem collects 24% VAT on every litre of diesel sold in the state.
Profit margins are the costs incurred by Indian oil marketing companies to refine the crude oil to petroleum products and transportation costs. Dealers commission, on the other hand, is the cost incurred by petrol dealers for transporting the fuel from refineries to petrol stations, fuel station maintenance costs, etc. The commission is typically decided by the oil companies and will be revised once every year.
Factors Affecting Diesel Price in Salem
Not all the components that are involved in diesel pricing in Salem affect its rate on a daily basis. There are two major factors that affect diesel price on a day-to-day basis. They are the international crude oil price and currency exchange rate, both of which are volatile in nature.
The crude oil imported by India is termed as Indian Crude Basket. The price of Indian crude basket is determined by considering a weighted average of Oman and Dubai sour crude price and the brent sweet crude oil price.
The Petroleum Planning and Analysis Cell publishes the price of Indian crude basket on a daily basis. The Indian oil companies consider the same to update the domestic fuel prices in the country on a daily basis. Hence, any slight change in Indian crude basket would impact the diesel price in India.
Another factor that affects diesel price in Salem on a daily basis is currency exchange rate. Since crude oil is purchased in US dollars, in order to convert the price into Indian rupees, the oil companies consider current US dollar to Indian rupee exchange rate. Hence any slight change in the currency rate would impact the diesel price. Whenever the US dollar strengthens over the Indian rupee, diesel prices in India will increase and vice versa.
Other factors that may not impact diesel price on a daily basis are the state and central government taxes. The recent revision in excise duty on diesel was announced in February 2018, when the centre reduced the tax on both petrol and diesel by Rs.2 per litre. The revisions in state taxes will be done at the sole discretion of each state government.
Frequently asked questions (FAQs) on diesel price in Salem
- Why does Diesel Price in Salem change every day?
- Why is Dynamic Fuel Pricing introduced in India?
- Where do I get the cheapest diesel in Salem?
Diesel price in Salem changes every day due to the dynamic fuel pricing mechanism introduced in India in June 2017. The pricing model considers previous day’s international crude oil price and currency exchange rate and revises current day’s diesel price in Salem. The revised price will be updated at all the petrol stations across Salem at 6 a.m. every day.
Dynamic fuel pricing is a popular fuel pricing mechanism across the globe. The pricing model aligns domestic oil prices with the international crude oil prices so that even the minute benefit in the crude oil price will be passed to the end consumers on a daily basis. It prevents sharp increase or decline in diesel prices. It further brings transparency in fuel pricing, which was earlier under the control of state-owned oil companies, who used to revise the rates on fortnightly basis, by considering the average rate of crude oil.
Diesel price across Salem remains the same except for a few minute differences. However, the state-owned fuel stations such as Indian Oil, Hindustan Petroleum, and Bharat Petroleum offer best diesel price in Salem compared to private counterparts like Shell and Essar. Among the public sector players, Indian Oil offers the cheapest diesel price in Salem.
Also Check Diesel Price in NearBy Cities of Salem
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