Tuesday, November 27, 2012

#52. Petrol vs. Diesel and LPG: Food for Thought

The government has been merrily granting permission  to petroleum companies to peg  petroleum  prices to the current prices prevailing in the world market. I remember that when petroleum prices were controlled by the government and were in the category of administered prices,the government raised the prices once or twice in the year, and that also invited criticism from the media and the people who had to bear the additional burden, that is the consumer. Now  the prices increase every few weeks, Yes, it decreases also,, but the decreases are much smaller than the increases. And the price rise is generally restricted to petrol and LPG. Diesel is often left untouched or the price  increase there is much smaller. The argument given is that diesel price rise would lead to all round price increase because the railway uses diesel, the road transport  
uses it , and so also the agricultural machinery. Petrol is used by the affluent, and so its price rise affects only a limited percentage of population which is able to absorb the shock. 

Now who uses petrol? The two wheelers, three wheelers and the four wheelers. The villager uses two wheelers, though the cream of it, the urban middle class in their bikes, and the lower middle class in the mopeds and low-powered bikes. Four wheel owners use petrol but most cars in the cheaper brackets are driven by the typical urban middle class who is just a shade better off. So the myth explodes. It is not black and white: the rich use petrol and the poor diesel or the products they use have a component of diesel in the transport therof. No Sir, petrol is used by the typical middle class. 

About LPG the ceiling of 6 cylinders per annum suffers from the wrong assumption that a family uses on the average 6 cylinders per year, any use beyond that can be made more expensive. However, an aerage family in India uses one cylinder for 25 to 30 days. No wonder some State governments realised this and quickly added another 3 cylinders to the limit. Print media does publish the consoling news sometimes that this ceiling may be raised by the central govt. However , we have not heard anything. The other problem is the harassment of the gas connection holder by compulsory deposit of KYC at the distributor's office under the threat that supply of cylinders will not be resumed till they are so deposited by a certain date. Why couldn't this e done at the time the cylinder is delivered at home? Or, at least the form could be given at that time which could be sent back by the customer by post or courier?

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