Diesel Price in Vellore
Diesel price in Vellore, a city in the state of Tamil Nadu, India, varies on a daily basis due to the dynamic fuel pricing mechanism. Further, the price of diesel differs from one petrol pump to another due to the dealers commission charged by each petrol station. If you are eager to know why and how diesel is priced in Vellore and how it changes on a day-to-day basis, keep reading, most of your doubts may get cleared.
Components of Diesel Pricing in Vellore
The components involved in the diesel price remain same across India. Listed below are different elements involved in diesel pricing in Vellore and in other Indian cities.
- Crude oil price
- Ocean freight price
- Oil marketing company’s (OMCs) profit margins
- State and central government taxes
- Dealers commission
Let’s look at each component in detail, starting with crude oil price. Crude oil price is the base component of diesel pricing in India. Reason – India imports more than 70% of its fuel requirements from other countries. Hence, the price at which Indian oil companies purchase crude oil from other countries forms the base price of diesel.
|Also Know: Diesel Price in Chennai|
The purchased crude will then be transported on ships from the international ports to some Indian ports. The transporter will charge a certain amount for shipping the crude, which is called ocean freight. The crude oil price and ocean freight are together called C & F (Cost & Freight) price.
The transported crude will then go to a refinery where it will be processed to extract diesel and other petroleum products. The Indian oil companies then sell the refined fuel, by adding refining and transportation costs to the C & F price, to retail outlets across the country. The refined fuel is then transported, either by rail or road, to various retail petrol stations.
Once the fuel reaches the retail outlet, central government’s excise duty, state governments value added tax (VAT) and a fixed profit margin or dealer’s commission will be added to every litre of diesel before it is sold to the end consumer.
Factors Affecting Diesel Price in Vellore
Now that we have understood how diesel is priced in Vellore and in rest of India, let’s look at the components that affect diesel price in Vellore on a daily basis and those which make diesel price different in different Indian states and cities.
- Crude Oil Price: One of the primary factors that affect diesel price in Vellore on a day-to-day basis is the crude oil price. The crude oil price is composed of various costs involved in exploration and extraction of crude from the ground. Further, the price of crude oil changes every day.
The crude purchased by Indian oil companies is termed as Indian crude basket. The price of Indian crude basket is the average price of Oman and Dubai sour crude price and brent sweet crude price. The price of Indian crude basket will be published by Petroleum Planning and Analysis Cell website on a daily basis.
The same price will be considered by Indian oil companies to decide the diesel price in Vellore on a daily basis. Since crude oil price is volatile in nature, any slight change in the price will be passed to the end user on a daily basis. Thus crude oil price becomes one of the major contributing factors to the diesel price in India.
- Currency Exchange Rate: Typically crude oil is traded in US dollars, which means the Indian oil companies pay for crude oil in dollars. Whenever the value of Indian rupee falls against US dollar, the companies have to shell out more rupees to purchase crude. Hence, any slight change in US dollar to Indian rupee exchange rate would affect diesel price in India. Since exchange rates are in constant fluctuation, the closing rate of previous day’s US dollar to Indian rupee exchange rate will be considered for calculating diesel price. Thus the exchange rate affects the diesel price in Vellore on a daily basis.
- State and Central Taxes: The taxes charged on diesel are next biggest contributor to fuel prices. In India, both state and central governments levy taxes on diesel. Currently, the central government charges an excise duty of Rs.15.33 per litre of diesel, whereas the Tamil Nadu state government levies a VAT of 24% per litre of diesel. Since Vellore is a city in Tamil Nadu, the same VAT applies for diesel sold in Vellore as well.
Though the tax rates won’t impact the diesel price on a day-to-day basis, any revision of tax rates would affect the price. The recent revision of excise duty happened in February 2018, when the central government cut the tax by Rs.2 per litre of diesel and petrol.
- Fuel Distribution and Marketing Costs: Diesel is initially transported across the ocean to the refineries. It then gets transported to retail outlets by rail or road. The price of transportation will be passed on to the consumer along with the marketing costs borne by the oil marketing companies. Hence, any change in transportation charges and marketing costs would impact diesel price in India.
Besides the above mentioned factors, other elements like extreme weather conditions, natural disasters in oil producing countries, new regulations by state and central governments, demand and supply metrics show a direct impact on the price of diesel.
Frequently asked questions (FAQs) on diesel price in Vellore
- Who will control petrol pump Prices in Vellore?
- Why do Diesel Prices vary in different states?
- Why do Diesel Prices in Vellore change every day?
Ever since petrol and diesel are deregulated in India, diesel prices in the country are being aligned to international crude oil prices. With regards to diesel prices at petrol pumps, they are under the control of respective fuel stations. The pump price is typically influenced by the cost of transporting fuel to petrol stations and the cost of running a fuel pump.
Of the many components that make-up diesel price, the state government value added tax is one. Since the tax rate varies from one state to another, the price of diesel varies across states in India.
Not just in Vellore, diesel prices across the country vary on a daily basis because of the dynamic fuel pricing mechanism. The fuel pricing model makes diesel prices in the country align with the international crude oil prices and currency exchange rate. For instance, to calculate today’s diesel price in Vellore, yesterday’s price of Indian crude oil basket and yesterday’s closing currency exchange rate will be considered.
*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.