Petrol Price in Warangal Today

The Journey of Petrol Determines its Price in Indian Market

To better understand the factors that affect the petrol price in Warangal or any other Indian city for that matter, one must know the journey of petrol from where it is born to the place it's sold.

Petrol, as we all know, is a fossil fuel found in vast underground reservoirs. Most of the petroleum reservoirs are found beneath the land or ocean. Petrol or diesel are originally available in crude form under the earth's crust. Once the related studies that confirm the presence of crude oil in a particular area are completed, the crude oil will be extracted by drilling the earth's crust. Thus extracted crude will be further refined to separate petrol, diesel and other fuel products.

With regards to petrol production in India, the country does have petroleum reserves. But the available reserves are not sufficient to meet the demand of India's ever-increasing population. Therefore, the country majorly depends on oil import from other countries. More than 70% of India's fuel requirements are met by importing fuel from OPEC nations such as Saudi Arabia, United Arab Emirates, Kuwait, Malaysia, Indonesia, and United States.

Indian oil marketing companies (OMCs) like BPCL, HPCL etc purchase crude oil from OPEC countries. Once the crude is transported through ocean to the country, the OMCs refine it to extract petrol, diesel, kerosene and other fuel products. The refined fuel products will then be sold to petrol pump dealers. The dealers then make the products available at their fuel stations for end consumers.

As the fossil fuel goes through various phases, it moves among different parties, each conducting their course of duty to make it reach the final consumer. Due to the various processes involved in its journey, various costs are involved to transport, refine, store and maintain the fuel. Each party involved in the process adds the costs incurred to the cost price of the petrol and thus the final price of petrol is composed of various elements. Any minute change in any of the elements thus impacts the cost of petrol in the country and hence in Warangal.

How is Petrol Price Computed in Warangal?

Petrol price in Warangal, similar to other Indian cities, is computed by considering various domestic and international factors as listed below.

1. Domestic factors
   1. Central government taxes
   2. State government taxes
   3. Oil companies profit margins and
   4. Dealers commission
2. International factors
   1. Currency exchange rate
   2. International crude oil price

Let's look at each factor in detail.

1. International Crude Oil Price: Crude oil price in the international market plays a key role in petrol pricing in India as the country imports more than 70% of its crude oil requirements from oil producing nations. Crude oil price is dynamic in nature and changes every day based on demand and supply metrics, climatic conditions and political stability in oil-producing countries.

With the introduction of dynamic fuel pricing system, petrol prices in India will be revised based on global oil price fluctuations. Hence, crude oil price plays a prominent role in petrol pricing in India.

For example, petrol price in Warangal today will be determined by considering the price of international crude oil of Indian basket on the previous day. Based on the price of one barrel crude oil, price of one litre petrol will be computed and will be considered as base rate in petrol pricing. Other components will be added to the base price to get the final petrol price for the day.

1. Currency Exchange Rate: When OMCs purchase oil from other countries, instead of paying for it in Indian rupee or the other currencies, they purchase crude in dollars. Not just India, the entire world trades oil in US dollars. Hence, the dollar to Indian rupee exchange rate affects the petrol price in Warangal on a daily basis.

1. Oil Companies Profit Margins: When the OMCs purchase fuel from other countries, it will be in crude form. They need to conduct refining activities to extract petrol and other fuel products such as diesel, kerosene, etc., from crude. They hence add the refining costs and profit margins to the cost price of the fuel before selling it to the dealers.

1. Dealer's Commission: Petrol pump dealers purchase the refined petrol from the OMCs. They then add transportation costs, dealer's commission, station maintenance costs, etc., to the cost price of petrol before selling it at the fuel stations. Typically, OMCs decide the dealer 's commission and revise the same once every year.

1. State and Central Government Taxes: One of the major components in petrol pricing are the taxes levied by local and central governments. While the central government collects excise duty on petrol, state government levies value added tax (VAT) on every litre of petrol.

Currently, the excise duty on petrol is Rs.19.48 per litre following the recent cut of Rs.2 in February 2018.

VAT is levied by state governments specific to each state. With regards to Warangal, the Telangana state government collects 33.21% VAT per litre of petrol. The VAT collected by Telangana is the fifth highest in the country.

Both the taxes will be levied on the petrol price once a petrol pumps dealer purchases it from the OMCs. It will be levied on the cost price of petrol dealers.

Breakdown of petrol price in Warangal, Telangana

*Disclaimer: BankBazaar makes no guarantee or warranty on the accuracy of the data provided on this page, the prevailing prices are susceptible to change and provided on an as-is basis. We accept no liability for any loss arising from the use of the data contained on this website.