Pricing of Automotive Fuel and Strategy for Cost Reduction During Distribution

Abstract

Prices of fuel vary depending on factors such as cost of buying finished products in country, tax rates, government subsidies for fuel, currency fluctuations, increasing oil demand, limits in refining capacity, international crude price, etc. About 80% of crude oil demand in India is met through imports and balance 20% from indigenous production. 'Dynamic' daily pricing for petrol and diesel was introduced in June, 2017. Prices of these fuels in India increase due to rise in international crude prices. Hike in excise duty and Value added tax {VAT) is also an important contributor to the rise in petrol and diesel prices. Taxes are approximately 100 % of the base cost of fuel. In this paper we have tried to evolve a strategy for cost reduction in automotive fuel by streamlining operations with use of innovative techniques for reducing the interface and consequent down-gradation of valuable products during multiproduct pipeline transfers.