Diesel Price In Kannur Today

Elements Which Influence the Revision in Diesel Price in Kannur

State-owned Oil Marketing Companies (OMCs) such as Indian Oil, Hindustan Petroleum and Bharat Petroleum purchase the crude form of diesel from oil-producing countries and ship them to refineries. The crude oil is refined and sold to the end consumer. While global crude oil prices and currency conversion rate are the international factors, taxes and operating costs form the domestic factor.

1. International Factors: India imports more than 70% of crude oil from oil-producing countries which makes it an expensive commodity in India. Crude oil prices are dynamic in nature as it's determined by several elements. If there's a production cut announced by the oil-producing countries or if there's an instance of shortage in supply, the prices of crude oil increases. Likewise, if there's an increase in production, the prices of crude oil declines. Trading of crude oil happens through US dollars. If the dollar appreciates over the Indian Rupee, the cost to purchase crude oil rises and vice versa. Hence, any change in the US dollar exchange rate impacts the diesel price in Kannur and in across cities in the country.
2. Domestic Factors: While there are two international factors which influence the diesel price in Kannur, there are several domestic factors which determine the cost of diesel in the city. Tax on diesel in Kannur forms the biggest component in the price breakup of diesel. The Centre levies excise duty of Rs.15.33 per litre, while the state of Kerala charges Value Added Tax (VAT) at 25.06% on a litre of diesel. Any revision of the tax rates leads to a revision in the diesel price. OMCs ship the crude oil, refine it, and diesel is then shipped to several fuel stations across the country. Prior to including taxes on diesel, profit margin, other operating costs and commission to dealers (petrol pump owners) are added to the final selling price of diesel.

Computation of the Diesel Price in Kannur

Now that we have analysed several factors which influence the diesel price in Kannur, let's break down the diesel rate recorded on 3 June 2018 to understand the computation of the fuel price better.

How Often is the Diesel Price in Kannur Revised?

Diesel prices in Kannur and other parts of the country are revised on a daily basis under the 'dynamic fuel pricing' mechanism. Oil companies include the preceding day's global crude oil price and the US dollar exchange rate to the Retail Selling Price (RSP) of diesel. This method has helped fuel companies as well as the customer. An instance of reduction in the global crude oil rate is immediately passed on to the customer and likewise, any incline in the unrefined oil price is passed on the customer to avoid any losses incurred by the oil companies.

Prior to the new pricing mechanism, India used to follow the fortnight fuel pricing mechanism; however, this did not let oil companies pass on any benefits or rise in cost to the customer thereby incurring losses. To offset the losses, the 'dynamic fuel pricing' was introduced from 16 June 2017.

Advantages & Disadvantages of Dynamic Fuel Pricing

How does revising fuel prices on a daily basis beneficial to oil companies and customers? The new pricing mechanism has its pros and cons for the consumer as well as to OMCs.

1. Oil companies are able to forecast their revenues and losses.
2. Even the slightest change in the global crude rate can be passed on consumers immediately and not wait for a fortnight.
3. In case of a sudden spike in the crude oil price, both the consumer and the oil company do not lose out for an entire fortnight.
4. Customers can take advantage of a low crude rate the next day itself.

Tips to Track the Current Diesel Price in Kannur

Since diesel rates are revised on a daily basis, the previous day's rate need not be the same as today. To find out what is the latest diesel price, consumers can utilise several methods introduced by oil companies.

1. Smartphone Apps: OMCs have launched smartphone apps to track the latest fuel price in a city. Indian Oil has introduced the 'Fuel@IOC' app, Bharat Petroleum has launched the 'SmartDrive' app, while Hindustan Petroleum has the 'MY HPCL' app to find the current diesel rate in Kannur.
2. Services Via SMS: OMCs also offer services through SMS. The process below will track the current diesel price in Kannur.
   1. Indian Oil: SMS RSPDealer Code and send SMS to 9224992249.
   2. Bharat Petroleum: SMS RSPDealer Code and send SMS to 9223112222.
   3. Hindustan Petroleum:  SMS HPPRICEDealer code and send SMS to 9222201122.
3. Website: Consumers can visit the respective oil company's website to track the current price of diesel in Kannur as well as other cities in India.

Petrol Vs. Diesel Price in Kannur

Petrol prices are higher compared to diesel prices as taxes, refinery costs, as well as other operational costs are higher for petrol compared to diesel. While petrol attracts excise duty of Rs.19.48 a litre, diesel is charged Rs.15.33 per litre. As for the VAT, petrol in Kannur attracts 32.03% and diesel is levied at 25.60% making diesel cheaper compared to petrol.

Goods and Service Tax (GST) on Diesel in Kannur

Since all commodity and services rendered comes under the new Goods and Services Tax (GST), typically diesel should be under the ambit of GST. However, the Government of India has exempted petrol and diesel from the GST. The revenue earned by both the Centre and the State in levying taxes are higher compared if diesel comes under the highest tax slab of the GST.

Currently, GST is not applicable to petroleum products; however, if it comes under the framework of the GST, the diesel price in Kannur will reduce significantly.

*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.