Shell outlets: shutdown coming?

Suman isn’t the only one. I too noticed that my neighborhood Shell bunk now sells only the premium petrol (Shell supreme or something), cost ranging from Rs 61 – 64 a liter over last month. The BP bunk nearby offers Rs 52 – 55 Rs/liter. 15% is a bit much premium to pay, though I know I get 8-10% better mileage with Shell. So, no more Shell now. And guessing from reduced crowds at this Shell bunk, this seems to be the case with many.

Reliance recently announced shutting down all its retail petroleum outlets (pumps). How long before Shell does the same?

Now, while filling at the BP bunk, I can’t help staring at the diesel rates – Rs 36 odd per liter! That is a third less than petrol, again, a bit too much, and calling out to trade in my petrol car with a diesel.

Its all pretty sad though – us, the consumers not paying the real price for petrol, and more so for diesel. The whole sarkaari petroleum machinery is happy siphoning off money from organized adulteration business (I don’t have proof, so this is loose talk by definition). And by subsidizing the cost of fuel, they keep our mouths shut and voters happy. Wonderful arrangement – that subsidy is like a kickback for us to let distribution irregularities pass off under the carpet.

Will the fuel prices be unreasonably high if sarkaari control over distribution and pricing were to go away? Don’t know. May be not, because loss of subsidy may be offset by more efficient and clean distribution process brought in by private enterprise. Or may be yes. But why should government care?

Entrepreneurship around alternate energy will prosper only if we start paying the real high prices for petrol and diesel, isn’t it? We will change our driving and private vehicle usage patterns only if ‘real’ and high fuel prices start pinching our pockets dry, isn’t it? Its sort of like saying water is important so preserve it, but keeping potable water’s cost so low that you don’t take those threats seriously.

So tell me now. Which diesel is better, Swift VDI and Getz Prime?


10 Responses

  1. Petrol and subsidized? We pay some of the highest rates in the world mainly because of taxes (not that I am against it). (Diesel is and at least because of that I think excise duties on diesel cars should be 30-40% and diesel within cities should be taxed heavily).

    The whole price and cost structure is warped though.

    The govt taxes and duties are about 35-40 (or more)% of the price of petrol. The oil companies are not allowed to recover the costs (including taxes) from the consumer. The govt then pays the oil companies a share of the taxes via oil bonds. Left pocket to right pocket.

    Shell and Reliance have to recover the entire cost (including taxes) from the consumer and hence are forced to sell at Rs.7-8 above nationalized companies. They entered the business under a premise that the govt would do away with subsidies. The govt (no thanks to the Karats and Rajas) cannot do it. So there goes the business plan down the drain.

    I cannot fault the distribution process too much. Have you ever had a problem finding petrol on a drive or bunks constantly out of stock.

    The fact that even private companies cannot make money unless they sell at 12-15% more than the national oil companies tells you that there are not that many efficiencies to be made by going private.


  2. Even I don’t agree that Petrol is subsidized for us. When I see the americans getting fuel at dearth cheap rates… I wonder why it’s so expensive for us. I am not an expert so have no clue about the intricacies of the business.

    From a common car drivers perspective I can vouch blindly for quality of fuel at all shell outlets. But I cannot say the same for any other.. Indian Oil being the worst in the category. Each pump has its own quality of fuel though they share the same name.

    Thinking of buying a Diesel car? Swift wins hands down. But I keep hearing very good things about Maruthi Desire as well.. but the waiting time is close to 8 months!

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  4. What the hell our Government in karnataka still thinking to knort the people ??

    Goa Rs 4 less TN \Rs 3 less And Kerals Rs 5 Less in petrol.

    What happens ,Why karnata not reducing its sale taxes on Petrol??

    Liter water is now Rs 15 compare to rising mineral water prize still petrol is cheap but still why nobody bothered for water price???

    Two of the Left-ruled States, West Bengal and Kerala, have decided to reduce the sales tax on petrol and diesel, to marginally reduce the impact of the price hike.

    The West Bengal Government Last week said it will reduce the sales tax on petrol from 25 per cent to 20 per cent and on diesel from 17 per cent to 12.5 per cent. The State has said it will lose Rs 500 crore annually because of this. It gets nearly Rs 2,000 crore as tax on petrol and diesel. The State’s annual revenues from sales tax are about Rs 9,000 crore.

    The Kerala Cabinet, which met last week, decided to reduce the sales tax on petrol and diesel. The quantum of reduction would be decided later.

    The Centre has asked all States to consider reducing sales tax.

  5. Why bangalore is not reducing the sale tax ??
    Because all M L A are planed to BUY a 6 BHK Houses in Bangalore city !!!!!!!!!!!!!

  6. Karnataka is a weird case. they don’t really seem to care about the development of the state and the people living in it.
    However the high cost of fuel in India is because of various reasons.
    1. The most important: we buy fuel at a ridiculously high rate, much higher than the US and other countries. a barrel isn’t a $100 for us. its more like $120.
    2. Taxes: We’ve got about 59% tax on the fuel we buy. There’s state tax, cess, excise, central tax, entry tax.
    3. weak Rupee: We (as with every other country) buy gas in $$$$ and we all know the Rupee isn’t as strong as it used to be. when i started using fuel, petrol was about Rs. 20 and so was the Re. against the Dollar.

    I can’t wait to leave this state.

  7. High cost of fuel is not due to Taxes or oil prices but due to the Government subsidy policy where the Kerosene (which is much higher than petrol) and LPG (actually twice the current price) is given at a subsidized rate. The loss incurred is balanced by the Ministry of Petroleum by levying it on Petrol and Diesel. Thanks to Politics of Indian Government (Lalus, Amar Singhs and the whole of Congress/BJP factions) who cry loud on price hike. The reconciliation of these accounts is infact a big headache in every budget and the planning commission cannot come to any recommendations due to this. Alternate fuel is available now in almost all areas. Hence we need just take the drastic step of stopping the usage of kerosene and hike the price of lpgs. Thereby when the prices of petrol and diesel are reduced, the transportation cost also reduces. But who will tie the Bell to the Cat (dirty Indian Politics)

  8. I think after reading the comments from quite a few of the people on the net that Shell does offer value for money after all, or atleast the assurance of not being cheated like almost all petrol bunks do when dispensing petrol. Most PSU petrol bunks cheat on the quantity of petrol provided and have tampered meters.
    How many of us have really measured the exact quantity of petrol dispensed out. If you really want to than take a measuring can yourself and not the one owned by the petrol bunk and measure the exact quantity in a litre. You will get a better information when u take a contained with a narrow neck at the point where you measure, as the difference is more evident then. From people operating the pumps also I realize that there is abudant cheating that goes on. If you challange the measurement you may be surprised with remarks including asking you to go elsewhere if needed . Have you noticed the operator at the petrol pump sometimes operating or pressing small gadgets in addition to the reset button on the meter ? Have you ever questioned on why and what it is ?
    Ok calculating the 10-15 % less that you may get at the PSU bunk translates to about Rs 5 to 7 which is more than the difference in the price that Shell charges. So it is not right to say that Shell charges more… the aspect that they dont cheat more than covers up for the difference in price. So when this fact is more evident than one may find patronizing Shell bunks.

  9. Folks.. Do you know what is the current price of Petrol and Diesel in Shell Bangalore. (18th December 2008)


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