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As a driver in India, you’ve definitely seen that fuel costs fluctuate widely from one area to another. Although it seems like diesel prices in India would be uniform everywhere, there are a number of reasons that might lead to price variations. In this article, we will discuss why fuel prices vary so much in various parts of India.
1. Taxes
Taxes are one of the most important components in determining diesel prices. Diesel prices in India can be very different from one state to the next because of how the country’s state and federal taxes work.
For instance, diesel fuel is taxed more heavily in certain states than others, with Maharashtra, Karnataka, and Andhra Pradesh as prime examples.
The federal government furthermore levies a standard excise tax as well as a special additional excise charge on fuel, which might also differ from area to area.
2. Transportation
Diesel prices are also affected by the cost of transporting the fuel. As diesel is usually transported by road from refineries to fuel stations, the price may be higher in locations that are farther from refineries or have poor road access. Northeastern states and certain mountain states, for example, pay more because of the increased expense of transporting goods there.
3. Price of Crude Oil
Diesel price fluctuations may also be attributed to shifts in the market price of crude oil, the primary resource used in diesel production.
With more than 80% of the country’s oil consumption being covered by imports, India is significantly impacted by increases in the global price of Brent crude, especially now that gasoline and diesel pricing has been liberalised.
Furthermore, due to the international sale of crude oil, global market changes may impact India’s diesel prices. The cost of crude oil and, by extension, diesel may be affected by geopolitical unrest, natural catastrophes, and other worldwide events.
4. Refining Process
Due to the wide range of techniques and technologies used in its production, the refinery that produces it may impact the quality and cost of diesel. Low-sulfur diesel, which is made in refineries with more advanced technology, may cost more than regular diesel because it costs more to make.
5. Demand and Supply
The market forces of supply and demand may also have a big effect on how much diesel costs. Diesel prices in India tend to increase during times of strong demand and fall during times of high supply. External factors like the weather, the state of the economy, and fluctuations in industrial demand may have an impact on both the demand for and supply of diesel.
Wrapping Up
Overall, taxes, transportation costs, the price of crude oil, the refining process, and market demand and supply may all have a big effect on diesel prices in India. As a driver, you should keep these things in mind and look for the most affordable diesel pricing. Doing so may help you save money on gas and other transportation expenses.
