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OPEC president Chakib Khelil on Tuesday said that Oil prices “will not come down.” He however assured that the oil cartel has already done what it can do in the matter but there is no hope of coming down of surging oil price rates.

“OPEC has already done what OPEC can do and prices will not come down,” Khelil told journalists as he arrived for a meeting with EU energy officials in Brussels.

Due to the increase in international crude oil price, government wants a price hike in fuel to combat the crisis. Can’t the central government reduce the price in the same situation??

Yes, government can reduce the price. But centre is busy in making profits by fooling the public.

Have a look at the following data (approx) which will itself explain all the fact:

Total petrol price paid by public: Rs. 56.61

• Basic Price of Petrol = Rs. 21.93
• Excise duty = Rs. 18.35
• Education Tax = Rs. 0.43
• Dealer commission = Rs. 1.05
• VAT = Rs. 6.30
• Crude Oil Custom duty = Rs. 1.10
• Petrol Custom = Rs. 1.54
• Transportation Charge = Rs. 6.00

Hence for Rs 22 liter petrol at pumps we people pays Rs 34 tax extra. It’s more than double the actual rate of petrol. Should tax be so high? Can’t government reduce this tax to a satisfactory level? What you say?

Tags: Oil, Oil Prices, OPEC, Rising Price

Due to the rising crude oil price in international market, a decision to hike the fuel prices in India may be taken tomorrow. The Cabinet headed by Prime Minister Manmohan Singh may meet on Friday to consider raising petrol and diesel prices.

Increasing crude price left the oil firms under pressure. With Indian Oil, Hindustan Petroleum and Bharat Petroleum projected to lose Rs 200,000 crore (Rs 2,000 billion) in revenues on sale of petrol, diesel, domestic LPG and kerosene below import cost, industry sources said a hike in the range of Rs 2 to 5 per litre appears on the cards. International crude prices reached an untouched height of $135 a barrel.

The three firms are currently losing Rs 450 crore (Rs 4.50 billion) in revenues on fuel sales every day. Petrol is being sold at a loss of Rs 16.34 a litre, diesel at Rs 23.49 per litre, LPG at Rs 305.90 per cylinder loss and kerosene at a discount of Rs 28.72 per litre. It will bailout state run firms that have been reeling under unprecedented high crude prices.

The three firms are faced with a huge liquidity crunch and are borrowing Rs 3,500 crore (Rs 35 billion) a month to meet day-to-day expenditure. Borrowings of the three firms have reached Rs 65,000 crore (Rs 650 billion).

Asked about the tomorrow meet Petroleum Minister Murli Deora neither denied nor confirmed Cabinet being scheduled for Friday.

“We are discussing all possible measures to help and protect our public sector oil companies . . . some remedial measures need to be taken (urgently),” he told reporters.

“I cannot rule in or rule out anything at this stage,” Deora said when asked if petrol and diesel prices hike was an option under consideration.

“We are concerned at the financial health of the PSUs.” he said.

Despite of the cost of raw material (crude oil) doubling to over $135 a barrel, government has not made any considerable hike in fuel prices which leads a revenue loss of Rs 200,000 crore to the three firms at the end of the current year. Last year, the revenue loss was Rs 77,304.50 crore (Rs 773.45 billion).

Tags: Bharat Petroleum, Diesel, Hindustan Petroleum, India, Indian Oil, LPG, Manmohan Singh, Oil Prices, PM

Oil Prices set a historic record of above $115 per barrel on Thursday as a fall in US gasoline inventories lead to a shortage in supply.

US crude set a new high of $115.45 a barrel and by 0830 GMT was trading at $115.08, up 15 cents. Last Wednesday it was showing 114.20 a barrel, up 41 cents then previous day. London’s Brent North Sea crude for June struck its own record high of 112.35 dollars on Wednesday. It later stood at 111.96 dollars, up 38 cents.

“It’s very much the dollar that’s (behind) the increase,” said MF Global analyst Robert Laughlin.

The weakness of the dollar continued to attract investors into oil and commodities to hedge against inflation and bet oil’s five year rally would help compensate for shrinking values of dollar assets in their portfolio amid a slowing US Economy. The dollar fell to an all-time low against euro on Wednesday.

“The market was already in a bullish frame of mind prior the data partly buoyed by further confirmation that China continues its lust for oil,” MF Global said.

“Summer driving season is approaching. And even in a recessionary Economy, seasonal gasoline demand will pick up, which adds to stress on the global oil supply chain,” Jan Stuart, economist with UBS, said in a research note.

“But before we get there, the stress already put onto the supply chain globally by middle distillate demand and supply dynamics is not still abating.” He said.

Tags: Crude Oil, London, Oil Prices, Prices

Crude oil price are soaring to historic heights and is a cause of concern in the global market. Crude oil prices make a hit on March 17 over the $111.80-per-barrel mark which now fell down to $105.11. Indian refiners buy at $101.2 per barrel with an increase in international crude oil price.

If not controlled the soaring prices can upset the booming economy.

The main factor behind the crisis is said to be fall in the dollar rates. A weaker dollar is increasing the oil demand as it becomes cheaper for buyers using stronger currencies.

Another factor that can be considered for an increase in Oil prices is because the investors are seeking a safe investment for their cash amid fears of rising inflation and a US recession.

Political tension in Kenya, Algeria and Pakistan as well as the threat of US sanctions against Iran earlier this year also provoked the issue.

Nigeria being the world’s eighth largest oil exporter and threats to oil facilities there is making another factor of oil price hike.

Saudi Arabia is the largest reservoir of oil with 21.9 per cent of the world’s reserves. Saudi Arabia produces over 600 million tonne of oil per year, according to the Oil & Gas Journal.

Canada comes next to Saudi Arabia at 179.2 billion barrels while Iran is at position third. This is roughly 10 percent of the world’s total proven petroleum reserves.

Also Iran is the fourth largest oil producer in the world and is OPEC’s second-largest producer after Saudi Arabia. Iran had the world’s second largest reserves of conventional crude oil at 136 gigabarrels as of 2007, although it ranks third if Canadian reserves of non-conventional oil are included. (1 gigabarrel = 1,000 million barrels)

Demand for oil is increased by double in last 3 years which hiked the global price. It was $50 per barrel in March 2005. By June 2008, oil prices doubled to cross the $100-mark. The demand is growing despite a slowdown in the US. Refining margins may continue to be high because of a shortage of petrol and diesel globally.

Tags: Oil, Oil Prices, US