Diesel price deregulated: 6 key things you want to know

  • Gaurav Choudhury, Hindustan Times, New Delhi
  • Updated: Oct 18, 2014 23:04 IST

The Centre announced on Saturday that it would lift controls on diesel pricing with immediate effect in a move that led to an immediate fall in pump prices of nearly 6%. Here are six things you want to know about the move.

The cut

Diesel price goes down Rs 3.37 with immediate effect

Why it's big?

# The government has deregulated diesel prices
# Now, oil companies will fix pump price of diesel according to crude price costs
# Diesel price will go up if crude prices rise; will fall in crude becomes cheaper
# Petrol price is already market-determined and change every fortnight

How was it earlier?

# The government fixed diesel price
# Oil companies often used to sell diesel at a loss
# The government used to subsidise oil companies to cover for this loss and keep retail diesel prices low

What led to it?

# Global crude oil prices have fallen to $84 a barrel, a fall of nearly 25% in the last six weeks
# This has helped oil companies to fully wipe out the losses on diesel price
# Since January 2013, diesel rates have cumulatively risen by Rs 11.81 a litre in 19 instalments
# Rates of diesel were last raised on August 31 after which losses have dipped

What's in it for you?

# Fuel bills will come down or rise depending on crude oil prices
# Diesel price, like that of petrol, will likely change every fortnight
# Deregulation will push private companies like Essar and RIL to open fuel stations
# Consumers will have more choice; competition will keep prices in check

Why is fuel deregulation important?

# Market-determined fuel prices would cut subsidies
# Lower subsidy bill will help govt cut taxes on petro products
# This will help offset the shocks when global crude prices shoot up

Read:Govt raises natural gas price to $5.61/unit

Read: Centre deregulates diesel, price goes down by Rs. 3.37 a litre

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