Tuesday, June 10, 2008

Fuel Prices: The Long and Short of it

This is not a post that describes
1) Goverment Policies
2) Conspiracy Theories
3) Organic Chemistry
4) Eric Theodore Cartman

The short of it;
a litre of petrol; as of Tuesday, June 10th, 2008 should cost 76.3458 Indian Rupees, but it still costs less than Rs.60

This is NOT accounting for the numberous other charges that will inevitably add to the cost of petrol like duties, profit margins, sales tax, etc.

Feel free to draw your own conclusions

The slightly more in-depth analysis
Let's get on with it

Oil Dashboard
June, Tuesday 10 2008

Anyway; that's the price for a barrel of crude oil according to http://oil-price.net/
So; how much is a barrel?

The barrel is the name of several units of volume

Oil barrel: 42 US gallons, 158.9873 litres,[1] or 34.9723 Imperial (UK) gallons.

Taken from Wikipedia

so 158.9873 litres of crude for US $131.50 as of June 10, 2008.

This works out to about 131.50US$/158.9873 L of crude; i.e. about 0.82711009 US $ / L of crude. Keep in mind that this is NOT what you put into your vehicle.

Now how much PETROL do you get from a litre of Crude

I was wondering the same and so I did a bit of googlin and I found a nice little blog. The blog linked to a certain cars.com site which didn't work and so had to be accessed using the wayback machine

Click here for that site

From that source, we obtain the data that only about 19.5 gallons of the 42 gallons of crude cab be obtained as petroleum. Going ahead with the math, this is only
Only about 46.42 % or .4642 of the crude is petrol.
This means from one barrel of Crude, we obtain .4642*158.9873 L=73.8019 L of Petrol per barrel
This means the cost/litre of petrol is
131.50US$/73.8019L=1.7817$/L of petrol.

How much is this in Indian Rupees (thanks to XE.com)
Live rates at 2008.06.10 20:26:13 UTC

1.7817 USD


76.3458 INR

United States Dollars
India Rupees
1 USD = 42.8500 INR
1 INR = 0.0233372 USD

There you have it; a litre of petrol; as of Tuesday, June 10th, 2008 should cost 76.3458 Indian Rupees, but it still costs less than Rs.60

This is NOT accounting for the numberous other charges that will inevitably add to the cost of petrol like duties, profit margins, sales tax, etc.

Feel free to draw your own conclusions


Abhi said...

Concise and quite informative. And to think I was fretting today about having to pay over $ 4.50 a gallon at the pump while people in india are paying about 6 bucks. It's really crazy. I've got friends who are actually riding bicycles to work now.

எஸ்.கே said...

Good analysis.

In India as in many other developing countries, fuel is subsidized and the amount spent in such subsidy is running into astronomical proportions. This money can be better spent on basic infrastructure that beg for more funding.

There is only one solution (until a viable alternative to petroleum is found). That is to strengthen and vitalize the public mass transportation systems and halt the craze for privately owned vehicles on the Indian roads.


nipun said...

uhhhhh....fr me ..it ws boring ..
n too lengthy to read ..
so i directly cliked on comment option .. :D

Gautam Kandlikar said...

I hope you realize that the price of a barrel of oil that the media puts out is not usually the price you actually pay for that barrel. Rather, it is a value at which someone is willing to buy a barrel of oil some months in the future a la this website.

An actual barrel of oil costs less than the rate at which the futures contracts are struck.

Gautam Kandlikar said...

Other than that, though, it's good to see that you are taking interest in this topic that should be raising more eyebrows.


Sujan said...

I remember seeing the headlines almost daily...
"Crude crosses 80$ a barrel"
then it was 100...and now 130...but i never made the connection...i always assumed that that price corresponded to 50-60 a litre here...

Fuck the Metric - Imperial battle...use one goddamn system!

You got a knack for intricate details man...gute analyse. sehr gut!

circean said...

here's the comment u've always wanted...
firstly, i've read mosta ur poss before... I like most of them too..
secondly, i hate leaving coments
thirdly, a goo portion of this last post went way over my head.. but it shows u put in a lotta effort.. so u must feel stronbgly abt it.. good for ya kiddo.. :P

desiderata said...

oh and fyi Indonesia just slashed its subsidies because they couldn't sustain it (but then again Indonesia was kicked out of OPEC cause it couldn't make its quotas and they're forking out to subsidize cooking oil and rice too) to massive uproar. They just did it in Malaysia too.

The thing about India is that there isn't really a viable alternative to private transport outside of the cities. The sheer size of the subcontinent is working against it. Besides, India isn't so chummy with Mother Russia anymore, though there is an India-China Russia-Pipeline in the works.

In Singapore, at the current exchange rate I'm paying 234 rupees to the gallon, though the tax burden on petrol is one of the lowest in the world, there are no subsidies. It bites.

Vatsan said...

dude, there is a mistake in your analysis of the prices.
even though you can get only 46% petrol from crude, that doesnt multiply the price of petrol by 1/0.46, because there are other components of crude that have monetary value.
these may of lower or of higher monetary value. and this could even give an error in the range of +50% (or more, or less. depending on the value of these other commodities obtained from crude) in the price of petrol.
and you also havent factored in the price of the fractional distillation and the refining. which would increase the price by a bit.
but, i do think that it is safe to say that all factors included, the price of a litre of petrol, without subsidies and duties, would be a sizeable amount lesser than 76 INR.

Avi C said...

@ Vatsan; you're the second person after my dad to point this out to me. Yes; what you say is right. Absolutely correct. In fact, I was planning to write a new blog entry explaining my error.

I could say that I've chosen a worst case scenario, but then again, I haven't included the refining costs, etc.

I did look up the actual price and saw it mentioned somewhere and it was about Rs.71/L , which is about 5 rupees away from my estimate.

A best case scenario, on the other hand would be about 76*.46 (assuming all the crude is refined into petroleum and there are NO extra costs involved), which is about Rs.35 but that, obviously isn't the case. That said, I am planning on a blog entry with more variables involved.

Suraj said...

You've missed out production costs incurred by the refineries.... So that would add more to your cost of refined products like petrol

Also take a look here... Intersting figures though i guess they are a bit out of date..

Ritika Dusad said...

nice and informative. the open end of the blog leaves the reader mind boggled(if thats a word) and provides food for thought.
could you explain the reason(s) (according to you)for inflation in the cost of petrol in your next blog? that would definitely be very very good.