Are you paying a right price for your fuel?

One of the most sensitive commodities are petrol and diesel.Any change in price will have a cascading effect on individual’s right from vegetable prices to auto fare.Governments have been wary of freeing the pricing mechanism for years.

With both petrol and diesel prices are decontrolled any change in the global pricing general public should get benefit out of it immediately.

Earlier the price was not reduced immediately because petro companies were doing under recovery –means  the land up price,refining price plus the margin was higher than the selling price. Hence price we not frequently varied to recover earlier losses.

With deregulation,under recovery has no role in pricing it means cost of fixing fuel price should be transparent, but in the ground level its very different.

For instance  in last November Brent crude was quoting at 110 USD/bbl and now its quoting at  80 USD/bbl it means the price was down by close to 26 per cent .During the same period the UDS was quoting at R 62.5 and now its  Rs 61.5 and this translate into 1.6 per cent difference. In all its 27.6 per cent.Last November the petrol price in Chennai was  Rs 74.22 against Rs  67.01 now prevailing.

It means the price is hardly corrected 11 per cent.In real term the prices should have been corrected by 27.6 per cent. Even if you have inflation impact on the refining companies at 7 per cent, the price should have to be at Rs 60 and not Rs 67( We may have a rupee cut on the fuel price this week still it far away from real pricing).

With no under recoveries, who is making money. This is a real pricing?