India Inc hikes petrol prices by Rs 5/ liter ! is it deregulation or up regulation of fuel prices ?

From midnight today, there will be hike in petrol prices across the India according to the latest price hike announced by Oil Companies. It will be a biggest price hike in history

The steep hike in petrol price is likely to be followed by a Rs 4 per litre increase in diesel rates and Rs 20-25 per cylinder increase in domestic LPG price later this month.

Gas Prices Hike
Is the price hike really needed at this stage, as India Inc is already struggling with high inflation numbers?

The answer from oil companies will be a definite "Yes". But let's make a comparison according to inflation, salaries and global gas prices( Petrol Prices ). We have seen a move from government to deregulate fuel prices and keep them vary according to market demand and supply to help Oil companies loosing money and government don't have to spend money on them.

United States:

If we see gas prices in United States, as of today highest price is $4.254 per gallon in California state. Now let's calculate this number in indian rupees. 1 galleon equals 3.78 liters so, 1 liter of gas ( Petrol ) costing is 50.64 Rs per liter ( Conversion: 1 USD = 45 INR ). That means highest price paid in United States per liter of Petrol ( gas ) is 50.64 Rs. If we consider average gas price in Unites States, it will come down to 46 -47 Rs / Liter. Now, an average person in United States earns an average minimum 1500 $ / per month, that is 67,500 Rs in India. So an average person can spend at least $ 200 means 9000 Rs a month on Gas. See more story links below


Let's take a case of developing country like India, People are struggling with price hikes and inflation. Government continuously hiking interest rates since last year. If we see, Petrol prices in Delhi ( Capital of India ) is close to 63 Rs/ Liter , some states like Gujarat, it will be 67 Rs/Liter after this price hike. This figure is 26 % higher than in United States as per above comparison ( 50.64 Rs / Liter in US ). If we see, average salaries in the country, it is around 15000 Rs per month ( 333 USD/ per Month ). Now if you think that an average person can afford drive a vehicle or even a public transport, how can it will be possible? In reality, Indian public can't afford such a price hike. Check out other links here, you might like it

Deregulated Fuel Prices

In United States, Markets oil prices decide gas price that mean it is deregulated. For Example, If oil prices start moving higher, Gas prices will move higher and if Oil prices will go down Gas prices will follow the same. This effect you can see in weekly oil prices. US consumers have seen gas prices to go up and also come down as per market movements of crude oil.

While in India, there is no change in petrol price from higher to lower side, even if when Oil prices was above $110 a barrel and come down to below $ 100 a barrel. If the fuel prices are deregulated as per government authorities, why Petrol prices are not changing up and down as per Oil prices in international markets?

Oil Companies:

Oil companies are still claiming that they are loosing money despite of such a higher petrol prices. If we see above figures and conclude that Consumers and citizens of India are already paying a 26 % higher prices than in United States although their average earnings are way below ( One fifth ) of the minimum earnings of US consumers and citizens. How India Inc will try to manage inflation and promote higher growth?

In India, labor is way cheaper than in United States, as we can see from salary figures. Oil companies aren't able to manage competitive prices despite cheap labor or they are claiming something different than they actually are.

After all, the story here is just for comparison and to raise questions regarding private oil companies' efficiency or may be government efficiency to deal with inflation.

India Inc took a wrong meaning of "DE RAGULATION OF FUEL PRICES" as per above comparison. The meaning that make sense is " UP REGULATION OF FUEL PRICES", because once price will go up, it will never come down, whatever will be the situation.

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