Reality check on oil price hike
Yesterday, Diesel and LPG's prices were hiked again. This encouraged me to do an analysis for self-satisfaction on whether these price hikes were necessary (rates have been increased 10 times in last one year) or just result of bad administration on PSUs. Now after talking to some friends who are working in oil industries and internet search. a) I found that following is processing cost for oil companies: 74% - Cost of the crude oil 11% - Taxes Please note: This has been reduced yesterday significantly! (Ref: Link1 and Link2 ) 10% - Refining costs 5% - Distribution and marketing (Ref: Link3 ) b) Current crude oil cost: Around USD 100/barrel (Ref: Link4 ) So, total cost of processing is: USD 135/barrel (from (a) and (b)) 1 oil barrel= 42 gallon and hence 159 litres (approx) Cost per litre of processed oil: USD 0.85= INR 38.2 c) Now, whether processed oil is petrol/diesel/keronses that depends on demand