Sunday 22 November 2015

Why is the price of diesel cheaper than petrol in some countries? What does the Refinery Output Prices says?



Why is Gasoline (Petrol) Fuel More Expensive Than Diesel? 

-in view of the final crude oil refinery output.


lets explore the reasons..

I. Why is the price of diesel cheaper than petrol in many countries?

Interesting, as a matter of fact, diesel should be costlier than gasoline. In many countries, diesel is costlier than gasoline unlike the case in India.

Of every 45 gal of petroleum products (produced from 42 gal of crude oil) volume of gasoline is almost twice that of diesel. This follows that diesel must be costlier than petrol. In many countries, government fuel subsidies reverses the play.


Gasoline (Petrol) should have been cheaper than Diesel; World country oil consumption order;
Gasoline, Diesel, Kerosene, Jet fuel, Heating Oil, LPG gas, Tar<> India, US, Japan, EU, Russia, Brazil


II. A brief case of India:
India's significant difference in Gasoline (Petrol) and Diesel prices. A major part of transportation of goods in India is carried out by trucks which use diesel as fuel that means most of the commodities prices are significantly effected by the price of diesel, so government of India gives higher subsidy on diesel than on gasoline (petrol) making diesel cheaper than petrol in India. India is big country and goods reaches a state after a long journey of thousands of kilometers. Even a slight increase in diesel price would increase the price of most of the commodities and hence the inflation.

       Gasoline, Diesel, Kerosene, LPG/ cylinder extracts of crude  oil and natural gas: Country consumption order ;India, , US, Japan, EURussia, Brazil, Germany, France, Italy, Bangladesh, Pakistan,UK, Nepal

Big part of India is rural, around 50-60% and diesel is consumed more in rural India, in trucks, buses, jeeps and most importantly in tractors for tilting farms. Most policies of Indian government are made keeping in mind its impact on rural India and farmers which gets the first pinch of price rise. Obviously it is the duty of the government to safeguard the poor section. It don't want to put or pass burden to the poor rural India.




Also see the pricing of gasoline and diesel in US.

Gasoline and Diesel retail prices in US; wrt taxes, distribution and marketing, refining, crude oil


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