After the daily price revision on 5 February 2018, diesel traded at Rs.64.84 per litre at Indian Oil Company and almost the same price was observed at Hindustan Petroleum. In fact, you can expect a minute flux in fuel rates in Mangalore from one diesel station to another. All diesel consumers from the city of Mangalore are required to make a note of daily varying fuel prices before they buy. Even slight price variations shall make a noticeable difference to billing amounts, especially for heavy diesel users.
A comparison of historical Diesel Prices in Mangalore between April 2017 and January 2018
| Date of revision | Cost of diesel per litre (in Rupees) | Result |
| 1 April 2017 | 59.17 | Up by Rs.1.85 per litre |
| 1 May 2017 | 61.02 | |
| 1 June 2017 | 59.41 | Down by Rs.5.5 per litre |
| 1 July 2017 | 53.91 | |
| 1 August 2017 | 55.30 | Up by Rs.1.57 per litre |
| 1 September 2017 | 56.87 | |
| 1 October 2017 | 58.69 | Down by Rs.0.64 per litre |
| 1 November 2017 | 58.05 | |
| 1 December 2017 | 58.88 | Up by Rs.1.47 per litre |
| 1 January 2018 | 60.35 |
Why Dynamic Fuel Pricing?
- Dynamic fuel pricing is beneficial from the perspective of both, fuel users and marketing entities.
- It does not have a waiting period of 15 days like before. The downs and ups in the rate of crude oil and the exchange rate are quickly transmitted to consumers.
- It helps OMCs to reduce operational expenses and time.
- OMCs can maintain an optimal level of stocks.
- Cash inflows and outflows remain unchanged for OMCs.
- OMCs can easily strike a balance between liquid assets and current liabilities.
Computation of the Retail Selling Price of Diesel in Mangalore as on 3 February 2018
The following table explains the computation of the retails Selling Price of Diesel in Mangalore:
| Cost Elements | Diesel Rate per litre |
| Crude oil rates including freight | $65.5 per litre or Rs.4,200 |
| 1 Barrel | 159 litres = 1 barrel |
| Crude oil rate a litre | Approximately Rs.26.41 per litre |
| Computation of OMC overheads | |
| Overall operational overheads | Approximately Rs.7.5 per litre |
| Profit margin of OMCs | Approximately Rs.2.87 per litre |
| Cost of Fuel after refining | Approximately Rs.36.79 per litre |
| Excise duty plus road cess levied on 1 February 2018 | Approximately Rs.15.33 per litre |
| Dealer price | Approximately Rs.52.12 per litre |
| Commission imposed by diesel dealers | Approximately Rs.2.51 per litre |
| Diesel cost before VAT | Approximately Rs.54.63 per litre |
| VAT on diesel in Karnataka | 19% |
| RSP of diesel | Rs.64.07 per litre |
Why has the Diesel Price in Mangalore increased over the last one year?
- The cost price of Brent Crude oil has increased by almost 10%.
- The commission charged by dealers has increases by Rs.1 per litre.
- The profit margin of OMCs has increased marginally.
Which factors affect the Diesel Price in Mangalore?
- INR/USD conversion rate: It is a most commonly traded exchange rate in the Forex market. Since the cost of crude oil is traded globally, the exchange rate directly affects the buying price of unrefined oil in India. Eventually, the RSP gets affected.
- Taxes: Diesel is taxed domestically. If the government reduces the tax, the diesel price also reduces and vice versa. We can take the example of the central tax, which was lowered by Rs.2 per litre in the month of October 2017.
- Crude oil rates: We have seen crude oil rates growing consistently in the last 12 months. It is a primary cost component that directly affects the RSP of diesel. In overseas markets, if crude oil rates increase, the RSP of the fuel increases and vice versa.