Petrol Price In Vadodara
The petrol price in Vadodara keeps varying based on multiple factors. However, the key aspect is due to the policy of dynamic pricing. This article focuses more on making you understand the various elements associated with the overall economic development in India and how it affects in a place like Vadodara.
Vadodara is a special part of Gujarat because of the recent development in its industrial sectors. Until the 1950s, Baroda was only known for its educational and cultural centers. But eventually, it became a hub for various dominant industrial sectors.
In the year 1962, Baroda saw an unexpected spurt in the industrial activity after the Gujarat Refinery was established. Various factors like product demand, availability of raw materials, material resources, and human mobilization from both private and government entrepreneurs increased. All these contributions made Vadodara one of India’s initial industrial centers.
|Also Know: Diesel Price In Vadodara|
The discovery of gas and oil in North Gujarat and Ankleshwar were the main reasons Gujarat grew greatly over the years. However, Vadodara is the biggest beneficiary for this industrialization and the major contribution comes from Indian Petrochemicals Corporation Limited (IPCL), Gujarat State Fertilizers and Chemicals, and Gujarat Alkalies & Chemicals Limited.
|Also Check: Petrol Price in Gujarat|
Components Of Petrol Pricing
Crude oil is one of the primary materials for petrol and as of now, about 74% of the crude oil requirements in India is met via imports. Therefore, the two key components that determine the overall petrol prices are:
- Foreign exchange rates
- International crude prices
Though these components help in determining the petrol price, they are not the only ones. There are a few other factors as well. In fact, over 57% of a region’s petrol price goes more towards dealer margins, duties, taxes, and other cesses.
In order to comprehend the methodology of petrol pricing, it is important to know the various stakeholders that are included in the entire cycle – right from retailing to deciding the price per liter. Here is a better overview:
1. Oil Production Companies
Oil production and exploration companies are responsible for producing oil but in crude form. There is a combination of private and public companies that together control about 25% of the overall crude oil requirement in India. The rest is just imported.
2. Oil Marketing Companies
The crude oil is bought by the OMCs (Oil Marketing Companies) who are in charge of handling oil right from the crude stage to the phase when it is delivered in its refined formula. Now, this sector comprises of both private and public companies. But the three big government companies that rule 95% of this oil sector are:
- IOCL – Indian Oil Corporation Limited
- BPCL – Bharat Petroleum Corporation Limited
- HPCL – Hindustan Private Corporate Limited
There are two other private sectors too which occupy the remaining oil market, which are:
- Reliance Industries
Dealers are either businesses or individuals who own petrol pumps in various regions. They are the final people who sell petrol to the consumers at a retail price per liter, after adding their margins and taxes.
Factors That Affect The Petrol Prices In Vadodara
Petrol prices fluctuate very frequently and even differs from one region to the other due to various factors like:
1. Increase In The Demand
When it comes to the Asian continent, India is a country that is constantly developing and experiences steady economic growth every day. This, in turn, has increased the petrol demands and other associated essential fuels, which results in a price hike.
2. The Cost Of The Crude Oil
One of the most important factors for the petrol prices to go up in India is because there is an incline in the crude oil prices in international market. Low production levels, increased international demands, and other political interruptions in major crude oil manufacturing countries influence the petrol price in other regions as well.
3. Tax Burden
The imposing of tax varies from one region to the other based on the government policies. This applies not only to petrol pricing but also for other petroleum products as well. Whenever the Indian Government increases the fuel tax, the Indian Oil Companies have no other option than to increase the prices of petrol to recover the loss and maintain their marginal profits.
4. Imbalance In The Supply-Demand Chain
One of the most challenging difficulties Oil Companies in India face is a mismatch in the overall supply-demand chain from the oil refineries after a higher input cost for the crude oil.
Why Is Dynamic Fuel Pricing Implemented In India?
According to the existing norms, the OMCs (Oil Marketing Companies) revised the price structure of both petrol occasionally and of course, the frequency of it is generated fortnightly. The change in fuel prices was made based on the currency conversion rates and international crude oil prices.
There were many drawbacks with the fortnightly revisions but one of the main was that by the time the petrol rates were modified, the actual rate of the crude oil would have changed a lot more in the global market. Also, the currency exchange rates also would have fluctuated. Therefore, the oil marketing companies incurred huge losses at times.
To prevent such uncertainties and scenarios, and to observe the fluctuations in the overall international crude oil prices, many state-run firms decided to implement the norm of “Dynamic Pricing” in India. With this concept, India took an immense step in joining the International Standards of Fuel Pricing.
How Does Dynamic Pricing Affect The Petrol Price In Vadodara?
The mechanism of “dynamic fuel pricing” was always in most developed countries but when it was launched in India, it changed the way the petrol prices were calculated. It helps in revising both petrol as well as diesel rates on a daily basis in synchronization with the following:
- Unrefined oil or crude oil
- CER – Currency Exchange Rate
According to the “dynamic pricing” mechanism, the petrol prices every morning at 6:00 a.m. (Indian Standard Time) based on the current market trends, crude oil price, and demand.
The main objective of the mechanism of “dynamic pricing” is to bring better transparency in the petrol prices so that the government does not influence or affect the Oil Marketing Companies (OMCs). This concept is implemented in every region of India. Even Vadodara also follows the mechanism of “dynamic pricing” and that’s the primary reason why the price keeps fluctuating often.
Effects Of Dynamic Fuel Pricing
- With an advanced mechanism like “dynamic fuel pricing,” the oil companies can easily forecast the net revenues in advance, which further helps in preparing the quarterly reports and balance sheets.
- The dynamic fuel pricing removes the speculative aspects of determining short and long-run price predictions.
- A steep rise or drop in the oil prices is highly detrimental to consumers and oil companies. Therefore, it is vital that the dynamic fuel pricing mechanism succeeds among the consumers and at the same time, making sure that the oil prices show a measure of stability.
How Can Consumers Know The Current Petrol Price In Vadodara?
There are two ways to get this information:
- A petrol buyer can download and install a few mobile apps in order to know the petrol price. There are three apps for this, which include SmartDrive, Fuel@IOC, and My HCPCL. These are provided free of cost by Bharat Petroleum, Indian Oil, and Hindustan Petroleum respectively.
- Apps are not an ideal option for a petrol buyer who does not own a smartphone. In such cases, an SMS can be sent to the respective service numbers of BPCL, HPCL, and IOC to know today’s petrol price in Vadodara or any other region.
Does GST Affect The Vadodara’s Petrol Prices?
No, as of now, GST does not affect the petrol prices because the Indian Government does not want to include that for an everyday commodity like petrol. Also, imposing GST will only reduce the petrol rates at least by 28-37% and the government cannot handle such a huge drop and loss. Even if this happens, it will hugely affect the revenues of both the Central and the State Government.
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