News Worms
News Worms

Fuel prices to be revised daily in 5 cities from May 1

Fuel prices to be revised daily in 5 cities from May 1

Will the latest announcement by oil marketing companies, that they will begin benchmarking prices of petrol and diesel to global prices daily, instead of fortnightly, remove this disparity?

State refiners - Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp - operate 90% of the retail outlets in the country. Presently, fuel prices change every fortnight and are calculated as net average of the prices prevailing over the previous 15 days.

This scheme will initially be introduced in 5 cities of Puducherry, Vizag in Andhra Pradesh, Udaipur in Rajasthan, Jamshedpur in Jharkhand and Chandigarh and will be extended to other cities across the country in due course. It is technically possible to change rates daily, but we have to first do a pilot.

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Most of the advanced markets across the globe have already adopted daily revision for fuel prices. Marginal changes in the daily price of fuel will not make or break consumer confidence or fuel inflationary expectations, at least because of oil costs, as it now does.

At present, the state fuel retailers revise rates on 1st and 16th of every month.

It's a tectonic shift in how petrol and diesel are sold to end customers.

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Why Dynamic Pricing of Fuels in India?

To avoid such scenarios of uncertainties, and to absorb the fluctuations happening in the global crude oil prices, state-run oil marketing firms have decided to make dynamic pricing the norm in India.

Daily revision of Petrol and diesel prices will take place every day in sync with worldwide rates starting this May 1. Now, as these oil marketing companies have joined their forces to implement dynamic pricing, it is now nearly certain that other players in oil retail, such as Reliance and Essar will also soon follow suit. Automation at most filling stations will allow companies to centrally change prices and availability of digital technologies and social networks will make it much easier for companies to convey price changes to the filling station.

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The petrol pump owners have expressed complete dismay and utter surprise over the abrupt announcement of the date for implementation of the price revision mechanism without any concrete homework. Consumers will become closer to market dynamics. "Though, there might be marginal difference from pump to pump", said Ashok.


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