Petrol Price In Pondicherry
Ever since the mechanism of “dynamic fuel pricing” has been implemented in India, the petrol price in Pondicherry, as well as every region in the country, has seen a lot of fluctuations. Though there are various factors affecting them, a key component is reported to be “crude oil.” For better understanding, here is a detailed article that not only explains the factors affecting the fuel rates but also gives a better insight into the latest pricing mechanism.
But before that here is a quick introduction to Pondicherry’s economic and industrial growth.
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Pondicherry (officially named as Puducherry), is India’s Union Territory. This city was formed from 4 exclaves of earlier French India, which are:
However, it was named after the biggest district – Puducherry. It lies in the southern region of the Indian Penninsula, which are bordered by the states – Kerala and Andhra Pradesh. With a GDP (Gross Domestic Product) of Rs.0.21 lakh, it is reported to be not only the densely populated but also the twenty-ninth most populated union territories and states of India.
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The economy of Pondicherry majorly depends on agriculture, which includes crops like sugarcane, cotton, coconuts, pulses, and rice. Since it is situated on the coastline, fishing is also another great source of livelihood.
Talking about the industrial sector, on the other hand, Pondicherry features about 5,500+ small-scale industries and 23 big scale industries. Combined, both these industries offer employment to over 50,000 individuals. The significant industries are:
- Food processing
- Light engineering
Besides all these, Pondicherry is well admired for its coastal location, sightseeing, cuisine, resorts, and the French past. All these have made this place a tourist attraction. In the year 2006, it attracted over 3 lakh tourists from around the world. This has also paved the way for various investment opportunities. In fact, the Government of India also supports different types of investments by increasing the subsidies in Pondicherry.
Factors Affecting Petrol Price In Pondicherry
Even though there are multiple factors that affect the price of petrol in Pondicherry, here are the significant ones that have a huge impact:
1. Cost Of Crude Oil
The international crude oil price is one of the key components in making up the retail price of both petrol and fuel. Now, the price of crude oil is determined by the global demand as well as the supply. Whenever there is an incline in the global demand, the production is low, or there is a geopolitical intervention in the oil-manufacturing countries, it leaves an impact on the price of the petroleum products as well.
2. Rise In Demand
Developing nations like China and India tend to have a high demand for fuel most of the time than other countries. Generally, when there is an increased demand for a commodity, the price of it increases immediately.
3. Imbalance In The Demand And Supply Cycle
The transportation cost of fuel in India is usually volatile when compared to other commodities. In India, the means of transportation is entirely dependent on fuel. Therefore, if there is a sudden decline in the petroleum supply, consequently, multiple issues come over. This usually includes lagging imports, refinery problems, shortage in the fuel inventories, etc. When fuel stocks run low, most oil marketers and wholesalers tend to bid much high for the available supplies. This, in turn, increases the price of petrol too.
If the fuel transportation cannot meet the supply flow from one geographical location to the other, fuel rates stay comparatively high. However, these price variations are normal and are something that is experienced in most commodity markets.
4. Seasonal Demands
There is a huge difference between a normal demand and a seasonal demand. Even though the demand for petrol in India is consistent and reflects the economy, there are times when there is an unexpected demand, which is usually seasonal. This happens during summers – when it is vacation time in the entire country and that’s exactly when people tend to travel the most. As a result, this increases the demand for fuel too. Again, demand increases the price in the retail market.
The retail price of petrol and other petroleum-based products depend majorly on “tax” that is imposed by the local governments. This varies from state to state. Therefore, each time the Indian Government sets a new tax, the OMCs (Oil Marketing Companies) have no other option than to hike the fuel rates but of course, they keep their marginal profits aside.
What Pricing Mechanism Does Pondicherry Follows?
Currently, not only Pondicherry but every region in India follows the mechanism of “dynamic fuel pricing.” It was implemented on June 16, 2017, after seeing the drawbacks of the existing system. Earlier, the fuel rates were updates on the first and sixteenth day at 8:00 a.m. of each month based on the previous day’s international crude oil prices and currency exchange rate. Hence, it was called the “fortnight pricing system.”
However, the Oil Marketing Companies incurred heavy losses at times and even the governments could easily influence or affect the prices. In short, there was no transparency in the system. To overcome all these, dynamic pricing, a method that most developed nations follow till date, was implemented.
According to this system, the prices are updated every morning at 6:00 a.m. IST (Indian Standard Time) based on the current international crude oil trends and other vital factors.
Does GST Have Any Influence On The Fuel Rates?
No, GST (Goods and Service Tax) doesn’t have any influence on the fuel rates in Pondicherry because this scheme hasn’t yet been implemented for a commodity like fuel. This is a big decision and will take a good amount of time for the Indian Government to take a step ahead. Even if this is implemented, the revenue of both state and central governments will be certainly affected. That’s a key reason why this might not come into effect that soon.
Other Important FAQS About Fuel
- What constitutes the retail price of fuel?
Every petrol station features various types of cost, which include:
- Cost of the commodity
- Marginal cost
- Operating cost
- Tax set by the central government
- Tax set by the state government
- Who controls the petrol pump price in India?
The Government of India deregulated the fuel prices on Jun 2010 & Oct 2014 respectively. Therefore, the pricing decision varies from one oil marketing company to the other. Also, this decision is based on multiple factors like:
- Product cost
- Distribution cost
- The cost to run the petrol pump
- Employee salaries
- Why have the fuel rates inclined in the recent years?
When compared to the previous years, the cost of the refined product and the crude oil have increased. These two factors are key components of the fuel rates to increase too. Other than these, increased oil demand, shortage in the refining capacity, and seasonal demand are few other factors that add to the retail price of fuel.
- Why does fuel rates differ from one country to the other?
The fuel prices vary from one country to the other due to the following reasons:
- Currency fluctuations
- Subsidies offered by the government on fuel
- Taxes set by the government on fuel
- The cost to buy the finished product
- Transportation cost
- Does the United States exchange rate affect the fuel price?
The majority of the crude oil is traded in USD (United States Dollars) and that’s why any slight difference between the U.S. dollar and a country’s currency can leave a big impact too.
Also Check Petrol Price in NearBy Cities of Pondicherry
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