Petrol Price In Kalaburagi Today

To better understand the dynamics of petrol pricing in Kalaburagi, why it varies on a daily basis, why is it on a constant rise for the past few years, etc., let's drill down further into the topic.

Factors affecting Petrol Rate in Kalaburagi

Petrol price in Kalaburagi, similar to other Indian cities, is made of various national and international elements. While International factors such as international crude oil price and currency exchange rate affect petrol price in the city on a daily basis, domestic elements including central and state government taxes, oil company's profit margins and dealer's commission, do show some impact on petrol prices but not on a daily basis.

Let's us look at each element that affects petrol price in Kalaburagi in detail.

1. Indian Crude Basket: More than 70% of India's crude oil requirements are being imported from other countries. The price of Indian crude basket, which is the price of crude oil imported by Indian oil companies like  IOCL,BPCL &HPCL etc plays a critical role in petrol pricing in India.

The price of crude oil is dynamic in nature and changes on a daily basis depending on a lot of external factors such as demand and supply metrics, climatic conditions and political stability in oil-producing countries. To calculate today's petrol price in Kalaburagi, yesterday's price of Indian crude basket will be considered.

1. Currency exchange rate: Crude oil trading typically happens in US dollars across the globe. Indian companies purchase each barrel of oil in US dollars. Hence, while computing petrol price in Kalaburagi, each US dollar will be converted to corresponding Indian rupees. The fluctuating nature of dollar thus shows an impact on the petrol price on a daily basis. Whenever the dollar strengthens, petrol price in Kalaburagi increases and whenever Indian rupee strengthens petrol price declines.

1. Central government taxes on petrol: Indian government collects excise duty on every litre of petrol sold in the country. All the states in India will be charged equal amount of excise duty on petrol. Currently, the excise duty on petrol in India is Rs.19.48 per litre. The recent tax cut happened in February 2017, when the central government reduced excise duty on Petrol and diesel by Rs.2 per litre.
2. Karnataka state tax on petrol: The state governments collects value-added tax (VAT) on every litre of petrol sold in their respective state. Unlike central government's excise duty, the VAT on petrol varies from one state to another as VAT will be charged differently by each state government.

Karnataka State government currently levies a VAT of 28.31% on every litre of petrol sold in the state. Since Kalaburagi comes under the state, the same VAT applies for the petrol sold in the city.

1. Profit margins of oil companies: The profit margins of Indian oil companies that include crude oil transportation charges, refining costs, and marketing costs do affect the petrol price in Kalaburagi. However, the change may not be on a regular basis. Whenever there is a revision in profit margins, petrol prices in the city would get affected.
2. Dealer's commission: Dealers purchase refined oil from oil companies and sell it in their respective petrol pumps. They add oil transportation cost from the refinery to fuel station, pump maintenance costs, etc., in the form of dealers commission to the cost price of petrol. The dealer's commission is usually decided by the oil companies and will be revised once every year. Hence, it will not show continuous effect on petrol price in Kalaburagi.