英语论文网

should also be market determinedboth at the refinery gate and retail levels.

With deregulated oil prices, once households and firms clearly see that international factors drive domestic petroleum product prices, and when monetary policy is seen to emphasizeprice stability, households and firms would be relatively relaxed. When there is a temporaryshock to oil prices, they would be much less likely to react to short-term fluctuations in pricesthrough wage hikes or increases in product prices. Thus, in OECD countries, from 1979onwards, where central banks have shifted into de facto or de jure ‘inflation targeting’, the greatcommodity inflation from 2002 onwards did not pass through into broad-based inflation in the2002-2008 period.

Petrol and diesel used in cars, including SUVs, are for final consumption. The higher excise duty on petrol compared to diesel encourages use of diesel cars. While greater fuel efficiency of a diesel vehicle should not be penalized, a way needs to be found to collect thesame level of tax that petrol car users pay from those who use a diesel vehicle for passengertransport. An additional excise duty on a diesel vehicle corresponding to the differential tax onthe petrol should be levied. At the present excise rates, the additional excise duty paid by apetrol vehicle owner who on an average drives 8000KM/year and gets an average mileage of13.5 KM/litre is around Rs.10000 per year. The present discounted value at 10% discount rateover the 10-year life of a vehicle would be around Rs. 67,500, and at 5% discount rate it wouldbe Rs. 81,000. An appropriate discount rate would be the rate on Government bonds. Anadditional excise duty calculation based on the following model, adjusted for the existingdifferential, if any, in excise duty between petrol-driven cars, and diesel-driven cars, should belevied on diesel car owners.

This is the market, which has caught the eye of most of the leading domestic and international oil companies, where they visualize greater expansion.

Superior Kerosene Oil (Kerosene)

This is sold through the public distribution system (PDS) of various state governments and through retail sales outlets. Because of its wide-scale usage the government has and will continue the subsidy for the PDS kerosene.

LPG (liquified petroleum gas)

This is one of the fastest growing segments for oil companies and the consumer base and the distribution/penetration of the product has grown over the past three years.

Growth In Urban India

Sector wise consumption

Oil consumed in the past eight years

How will pricing change for the retail consumer now? Will petrol and diesel cost less?

In India's socio-economic climate, petroleum products have always and will continue to be looked at very closely by the government.

What this means is that even with the dismantling of the APM process, the government will continue to have an indirect say and view on the pricing of these key fuels.

This is not simply because the taxes levied on such commodities are crucial to the state governments but also because the government has still to take a clear view on how much foreign competition and free market pricing should be allowed.

The recent Exim Policy has still not allowed free imports of petroleum products. If free