Petrol price reduction - May 2013

In May 2012, the petrol price was about INR 77.00 Per litre and Diesel was about INR 44.00 per litre at Chennai , a whopping difference  of about INR 30. In fact, I heard petrol car manufacturing was almost stopped due to slump in demand around same time and many were focused on buying diesel car, in spite of paying higher upfront cost of more than INR 1,00,000, even though their car usage was low.

Last year May 2012, had made some basic calculation comparing year 2008 price peak barrel price of oil, exchange rate against market petrol price and posted about the about the increased price of petrol. My observation was based on the  chart below in May 2012 (i.e INR 77 /litre) is higher or overpriced by about  INR 13 then.

A year later now, there is not much change in situation, barrel price is around USD 100 and USD exchange rate is almost same. However, the petrol price at Chennai is now dropped to INR 65 and diesel per litre is in range of INR 50, with a difference of only INR 15. This should bring some cheer to petrol car users and it could well mean, my earlier calculation on petrol (overpriced) right???!!! :-)

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Cyclone - Neelam

After Sandy the 'big brother' cyclone lashed NY, Chennai and surrounding area is ready to face the little sister cyclone 'Nilam'.

As per report, Nilam is currently crossing Mahabalipuram from 5.00 PM onwards with gusty wind, the rainfall is less and expected to cross in about 2 hours time.

It has been intermittently raining since yesterday morning at Chennai.

Today, morning we had a bit of sun coming out in morning, however since 2:00 wind speed has increased though its just drizzling.

Had been to terrace of our building at about 6:00 PM and could feel the pressure of the wind, should be in range of 50~70 Kmph. Interesting, to see clouds just moving across in great speed.

Power has been shot down most part of city.

Chennai had received 50% excess rainfall since start of North east monsoon around Oct 20th and as usual the Chennai's infrastructure woes continues due to rains. Further, fortunately rainfall is pretty less while Nilam is crossing.

Lets hope we receive lesser rainfall in the next few days, as we are approaching 'Deepavali', otherwise Chennai would just float.

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Oh!..Not again... Petrol price increase May 2012.

My previous post was about depreciation of INR against USD and pointed out that petroleum product prices are bound to increase if depreciation continues,
While posting, my previous post, one of the factor, which I thought would be in our favour was that, crude oil price per barrel was still hovering around 100 USD and not at its worst. At one point of time in 2008, the crude oil per barrel was around 147 USD. Hence, I thought it may take some more time before any kind of increase.

  Hmm… however was shocked and surprised that only petrol price was increased by 7.50 INR per litre. Interestingly, petrol is environmental friendly when compared to diesel.

Made an attempt to compare & compute estimated prices, by considering the international prices of barrel of crude oil in year 2008 and 2012, the actual exchange rate and inflation.

Going by my calculation, it seems like we are being over charged by about 14 Rs.

It was said the government has decentralized and do not control oil company and its prices. Hence, are we being overcharged, with profit motive?.

There could be another debate, that Indian government is looking for ways to decrease or remove the subsidy over period of time and subsidy is being reduced further now. But, then how are our neighbors like Pakistan and Srilanka are in position to provide petroleum product price at better rate compared to India and still survive !!?!!. The point to note here, is that both Pakistan and Srilankan currency (Rupee) is weeker when converted to Indian Rupee.

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Why rent is better deal than mortgage?.

Recently,read this article on "mortgage loan" and felt worth sharing.

 Though the article had been written with US market in mind, the points mentioned would very well be applicable for Indians as well. On top of this, Indian system is suppose to have additional drawbacks,

 Indian interest rate is almost twice when compared to US, which mean higher out go of cash towards interest component in earlier years. Another point is that, one who invest money in mortgage, would have invested all his earning and he has to keep paying the interest component for the first few years. After few years, if one is able to make saving or his income increases and decides to pay back or part pay the home loan, its going to only reduce the principal amount for which the interest component is already paid during earlier years of loan.

 Hence, the real benefit is for the mortgage company or financier.

Finally, the cost of real estate in India seems to much higher than developed economies. An article related to " India property bubble".

Is worth to think through and decide before investing. 

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Another round of Petrol price increase...Jan2011 ?!!#$

Hmm... Another round of petrol price increase and it will now be around Rs 63/lit at Chennai, but I fail to understand why?.

Since Jan 2010, I lost count number of time fuel price was increased, if today increase if taken into account, it most likely to be the 5th since Jan 2010. I am wondering what could be the reason, well people linked with this industry might say "petroleum price in the world market has increased ". Oh really....., my mind is refusing to accept it.

Let's quickly look as how petroleum price movement was in the last couple of year. It peaked to 132 USD per barrel in June 2008, the average petrol price in Indian market was around Rs 50 INR /lit. Then came a huge drop, in Dec 2008, it dropped to a whopping 45 USD per barrel, the retail petrol price in the Indian market was reduced to about Rs 45 INR/lit ( a drop of just 10%, whereas comparatively it should have become Rs 15~20 INR/lit in Dec 2008 when compared to international price).

When gold prices movement in India is based on international price, why not then the petroleum prices?

Now, in Jan 2011, it is still at 90 USD per barrel and never at all time high of 132 USD as in 2008, but still in retail market petroleum price to common man is at all time high in India.....My mind was refusing to get reason or logic for such petroleum price increase...

Its bound to "fuel" another round of inflation...

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