Petrol shortage in chennai!!!!

[Kumar]

Suresh and other chennai vaasis, how are you guys managing with petrol running dry in Chennai / Tamilnadu the last couple of days?

Looks like All India motor transport has called indefinite strike.. Things doesn't look very good..

[suresh]

It has taken a while for the national media to catch on. First, regular unleaded petrol disappeared from most petrol bunks and we are forced to buy premium petrol which is 7-15 rupees higher with no tangible benefit to the consumer. From what I hear, the same is true with diesel. The Hindu reported that there was a diesel shortage but that petrol was ok. Looks like there is a racket involving the oil companies as well as petrol bunks though I don't understand the precise modus operandi. The bottom line is that there are long queues for petrol and diesel and several bunks run out of petrol by mid-day. One doesn't know what the truck strike will do to the current situation.

I use bicycle to work and so am not affected too much. Of course, I need to be able to get petrol for my car.

Suresh

[suresh]

Update: Yesterday, normalcy returned and there appears to be petrol in the bunks and the queues are much shorter.

The good thing that has come out of this temporary problem is that  more people have started using public transportation -- apparently, patronage of the MRTS has gone up. Software companies had very flexible pickup and drop schedules for their employees. Now, I think Wipro has done a rethink on the daytime schedule and will pickup or drop people at only specific central locations in the city. I find that urban, upper middle class people have been busy increasing their carbon footprint without thinking about its global consequences. I hope that the current crisis in Chennai as well as the increased petrol/diesel prices will spur things such as car-pooling. Otherwise, I foresee a rich India ten years down the road, which is as bad as the developed world, in its consumption of resources.

Suresh

[Kumar]

Good that shortage has blown over... I hope indians seriously rethink their strategy w.r.t use of petrol and start using public transport as much as possible..

[prasen9]

Innovation wrt petrol will not happen (at a serious pace) without the government stopping subsidies to petrol and tinkering with currency rates.  If the true costs are passed over, that will help reduce congestion somewhat in the cities and encourage alternative energy.

[suresh]

There is no real subsidy in petrol as the consumer does not pay less than the cost of petrol. It is just that a huge percentage is taken by the government as tax before passing on the balance to the government run oil company. Remember, profits from the oil company also go to the government. So the onus is on the government to compensate the oil company for losses, if any, by passing on some of the increased tax revenue to the oil company.

A sensible way to go would be to pass on a significant portion  of increases in petrol prices to the oil company while keeping the tax component fixed. Otherwise, roughly a one dollar increase in the price of oil will translate into a two dollar increase to the Indian consumer.

This being said, I think every one of us has to do a rethink on how much petrol we consume, for that matter all sources of energy and work towards reducing that.

Suresh

[Peter]

Thanks for the insights on prices in India, Suresh.  First i have seen it this way.

Petrol prices* in India are now $4.89 per gallon (Rs. 53 per liter).  Very comparable to the USA, where it is an at a recent average of $4.07.  Taxes in the US are fixed (federal, varying state rates). 

The free market is at work (although big oil companies are a powerful lobby), and the $4 price seems to have hit a raw nerve at least in my corner of the USA.  People are consciously driving less, driving slower and judiciously trying to find alternate ways to travel.  Great wake-up call and wonderful for the environment!

Alternate energy is going to be the very big from here on!  Also to be considered is that energy prices have a permeating effect on almost everything - utility bills, trucking (food), airlines.
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*Purchasing power parity is another issue.

[gbelday]

Thanks for the insights on prices in India, Suresh.  First i have seen it this way.

Petrol prices* in India are now $4.89 per gallon (Rs. 53 per liter).  Very comparable to the USA, where it is an at a recent average of $4.07.  Taxes in the US are fixed (federal, varying state rates). 

The free market is at work (although big oil companies are a powerful lobby), and the $4 price seems to have hit a raw nerve at least in my corner of the USA.  People are consciously driving less, driving slower and judiciously trying to find alternate ways to travel.  Great wake-up call and wonderful for the environment!
Alternate energy is going to be the very big from here on!  Also to be considered is that energy prices have a permeating effect on almost everything - utility bills, trucking (food), airlines.
--------

*Purchasing power parity is another issue.

I think the people will get used to the prices and everything will be normal again. That's pretty much how the human psyche works (my opinion). I do agree that we have to explore other forms of energy.  I particularly like Mcain's talk on nuclear energy though it may not see the light of the day.

[shibi]

I don't know the exact tax rates in India for petrol. But I think the general perception that the taxes are huge is incorrect, at least in the present time of high crude oil prices.

Lets take the case of US, where we have some data available.
Energy Information Administration

It shows that in May 2008 when the retail price of gasoline was US$3.77/gallon, the percentage of crude oil price in the gasoline price was 75% (now it is still more). Refining, marketing & distribution takes another 15% and the taxes are 10%. I think the situation in India is similar.

Lets us make a simple calculation. The crude oil price for today is around US$ 137, which translates to Rs. 5891/ barrel (US$ = Rs. 43). Since 1 barrel is 160 litres, the price of one litre of crude translates to 5891/160 = Rs. 36.82. Adding transportation, refining and distribution costs to the above (assuming a fifth of the above, similar to the US data) gives a figure of around Rs. 44, which should be close what a litre of petrol actually costs.

[sameerph]

Lets us make a simple calculation. The crude oil price for today is around US$ 137, which translates to Rs. 5891/ barrel (US$ = Rs. 43). Since 1 barrel is 160 litres, the price of one litre of crude translates to 5891/160 = Rs. 36.82. Adding transportation, refining and distribution costs to the above (assuming a fifth of the above, similar to the US data) gives a figure of around Rs. 44, which should be close what a litre of petrol actually costs.

Litre of Petrol cost around Rs. 55 . I believe at least half of that cost is due to taxes. ( excise & local VAT). So, the public sector big oil companies must be only getting around Rs. 25-30 per litre against the cost of around Rs. 44 as you mentioned.

[shibi]

The downstream oil companies (BPCL, HPCL etc.) in India are loosing money as they are selling it as a loss to the Govt.

The upstream oil companies (ONGC, OIL) are getting only US$ 55/ barrel and are not free to sell at the international price. So effectively, the price of crude in India is a combination of international price and the local price. For example, the effective price of crude in India for today comes around 115 US$ (the local production of crude is only 25-30% of the total).

[prasen9]

Not really related, but I did not know where else this fits. http://www.huffingtonpost.com/2010/08/0 ... 67452.html

[suresh]

Phew, for a moment I thought there was a petrol shortage that I didn't know about Anyway, I don't see the concept of buses straddling cars working in India where people are yet to learn to drive in a lane. It is a common sight to see people switching lanes frequently by mentally solving an optimization problem without taking into account of simple-minded constraints (such as red lights, safety of others).

[prasen9]

Indian driving follows a greedy solution. If there is an inch of space grab it. (Hyperbole of course, but has some truth to it.)

[jayakris]

In most cases, the Indian drivers absolutely maximize the capacity of the road (in terms of "usable space") and drive with the best imaginable courtesy that is possible under those circumstances to other drivers (ie, try best not to kill others!) - nobody else in this world (except perhaps in Egypt or other african countries that I have not visited) is capable of doing that like the Indian drivers.

I get behind a wheel virtually within half an hour of flying into India everytime and start driving - and did that again for the last 6 weeks. I drive exactly like how Indians do while in India and return with yet another massive dose added respect for how courteous the drivers actually are (again, in avoiding accidents to each other somehow, in split-second yield decisions) - though every driver in India thinks that everybody else is not courteous, completely ignorant of the number of cases when others let them live!!

Lack of lane "discipline" - well, I do not consider it to have anything to with native lack of discipine in the people. It is a direct result of there being a very heterogeneous vehicle mix, in terms of lengths, widths and speeds of the moving objects. The concept of lanes does not really apply in such a mix. It is again the Indians' ability to adapt and find the best-possible solution that keeps our traffic moving...

If all autos can be replaced with Tata Nano (which actually costs only just about the same as an auto, at about 1.5 lakhs) taxis, things could change a bit in India. Or there should be strict enforement of the turning radius of any autorickshaw (never gonna happen) and two-wheelers etc should be restricted to one lane (or 2 to 3 half lanes) on all urbal streets - which is also very tough to do and enforce.

The first thing to do in India is to allow massive fines (TEN times what is levied now) on people driving personal cars (most of whom can easily afford it) and allow the police to do that. Yes, the police"men" will make a lot of money, but I like it because it is time police "men" became police officers in India - at least we should have the money to buy them guns unlike what happened in Mumbai on 26/11 .. Then watch traffic capacity go down because of "discipline" unless serious lane striping and vehicle mix restrictions are done

Jay