Lifelines of transport - Diesel and Petrol in India
Diesel and Petrol in India
The population of the country is entirely dependent on two basic sources of energy:- Petroleum and diesel. In today’s India, one can hardly imagine his life without these two. So, it will be interesting to have a look on the consumption of petrol and diesel in India:-
India’s energy basket has a mix of all the resources available including renewable (solar energy, wind energy, geothermal energy, biomass energy etc.). Coal has the first place in the nergy consumption followed by petroleum products. 545 of the total installed electricity generation capacity is coal based. Share of petroleum products and natural gas in energy mix is 23% and 85 respectively. Now, the estimated reserves of crude oil in India as on 31.03.2012 were at 759.059 million tons (MT). geographically, maximum reserves are in the western offshore(44.46%) followed by Assam (22.71%) whereas the maximum reserves of natural gas are in the Eastern Offshore (34.73%) followed by western offshore (31.62%). Even in this, following are the points reflecting the pattern of consumption of petrol and diesel:-
• 70% of diesel, 99.6% of petrol is consumed by transport sector.
• 13.15% of diesel consumed by private cars and UVs , 8.94% by commercial cars and 6.39% by 3 wheelers.
• Agriculture sector uses 13% of Diesel, industry consumes 9.02% and mobile towers 1.54%
• In petrol, 99.6% is consumed in transport sector out of which 61.42% is accounted for two wheelers.
• Out of the total petrol and diesel sales in the country, more than 90% is sold on retail outlets.
Difference between petrol and diesel
We see that a car runs on diesel and can run on petrol as well. The smell, texture etc. of these two energy resources is pretty similar. Then what is the difference? Let’s find out:-
Petroleum is refined to make petrol and diesel. Petrol is produced at a temperature between 35 to 200 degrees while diesel is produced at a boiling point of 250 to 300 degrees. Gasoline contains about 34.6 megajoules per litre in petrol while diesel contains about 38.6 megajoules per litre. So, diesel has a higher power. Diesel is more fuel efficient with 1.5 times more than petrol.
Pricing of Petrol and diesel
We all know that petrol is more expensive than diesel. One of the reasons for this price variation is the amount of taxes levied in petrol and high demand as petrol is consumed by two wheelers. Also, petrol has been deregulated which means that price of petrol is decided by market forces whereas in case of diesel, it hasn’t been fully regulated and government provides heavy subsidies on it. But it’s not just petrol, diesel and petroleum product prices are regularly increasing. Why? Due to the falling rupee, the Indian oil companied had to pay more amount to import crude oil which eventually leads to increasing fuel prices. Foreign suppliers sell crude oil to Oil Marketing Companies (OMCs) in India at benchmark prices.One barrel of crude oil contains about 160 litres of oil priced in US dollars. To calculate price, US dollars are converted to Indian rupee and then divided by 160. After buying, crude oil is transported to refineries in India. India at present has about 20 refineries. Crude oil is then separated into various products like petrol, diesel, coal tar, etc in distillation towers of these refineries. Then the cost of distillation and refining is added to it. Before being sold at retail outlets, a lot of taxes are also added to derive the value of fuel. So, any fall in Indian rupee will automatically result in fuel price hike.
Goa is the only state in India where petrol prices are less than diesel prices because state government has abandoned huge amount of taxes on petrol. So, after knowing about the consumption, pricing and derivation of the two major fuels of India, we can easily calculate how the increase in prices of these products result in total inflation hike.
