Latest crude oil price is $ 58.18per bbl, if we will convert it in indian terms, it is INR 18.30 per litre, which is very affordable to us. To calculate market value of finished product we have to add refining, distribution cost and profit of refinery.
To arrive on this figure we should rely on government companies data. If we analyse cost of production of these companies, we will find that these companies are not required to spend any money on refining these products. Their investment and infrastructure is giving them leverage to refine crude oil on loss, because their income from other sources are more than their profit.
(IOCL P & L and BPCL Annual Report )
But we are paying above 45 per litre (varying state to state) for petrol. Here is the Second question of wastage in quantity. 60% of crude oil are converted into petrol and there is only 5 % wastage in whole process. Remaining 35 % is sold in the form of Diesel or other lubricant. Some of them are sold at price above petrol.
Final thing, purity in petrol. As per indian government policy, all companies sold 85% pure petrol ( Speed – 90 %). 15 % of ethanol is mixed in these products to save foreign currency. This is waste product of sugar and alcohol industry. Any company need not to pay any thing for it. Supplier also provide free of cost transportation to oil company to save his cost of cycling.
After adding all these things price of petrol should not be more than INR 25. (if we assume that 40 % portion of crude oil remain unsold, which is quite unrealistic assumption)
We are paying above 45. We are paying difference on account of various duties levied by governments. (Central and State)
Will our new government will do anything for this or will enjoy this money for their own ???
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