Diesel Price in Gujarat

Factors Affecting Diesel Rates in Gujarat

The diesel prices are dependent upon various factors and it is not like other commodities. Various other components also add up to the retail selling price of diesel and it includes the cost of crude in the global scenario, rupee-dollar exchange rate, cost and freight price, taxes levied by both the Central and respective State governments, demand and supply factor, logistics, transportation charges, operating costs and margin.

• Cost of Crude in the global scenario – Cost of crude is the major factor in deciding the prices of diesel prices in the domestic market. India is a major importer of crude from abroad. The country imports close to 80% of crude from oil-producing countries. Currently, the rallying crude prices have led to the rise in domestic diesel prices in India.
• Rupee-Dollar Exchange Rate – The value of domestic Indian rupee vs United States of America’s Dollar is also an important factor in determining diesel rates in the domestic market in Gujarat because crude is priced in terms of dollars. A strong dollar will make crude oil expensive for other countries currencies whereas a weak dollar will make crude oil cheaper for holders of other countries currencies.
• Cost & Freight Prices – The cost and freight prices involved in transporting diesel from one place to another is also involved in determining the prices of diesel in Gujarat. Higher cost & freight prices contribute to an increase in the final diesel prices and vice-versa.
• Taxes levied by both the Central and respective State governments – The tax rates of diesel depends on the central and state government policies on imposing taxes on fuels. As and when the government of India and respective state governments raise the tax on fuels the oil companies will also increase the price of diesel in India to recover losses and to maintain the marginal profits in its oil business.
• Demand & Supply Factor – The fleet vehicles in the country mostly depends on petrol. If the supply of petrol reduces as a result of refinery problem or lagging imports, diesel stocks may decline. If the transportation for the supply of diesel from one place to another place cannot support the flow of supplies, then the prices of diesel remain comparatively high.
• Logistics – Logistics also acts as a factor which affects the pricing of the diesel in India. Diesel transported to longer distances to cities or regions farther from depots will be priced higher than the places nearer to the storage area of the oil companies.