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Fuel Price FAQ
Frequently asked questions specifically about fuel prices in India.
Q : What is the retail price of fuel made up of?
A : The price of fuel at the retail station comprises the product cost, central government excise and taxes, State government taxes and operating costs and margin.
Q : Who controls pump prices In India?
A : Petrol pricing have been deregulated by the Indian Government in June 2010 , while diesel prices still remain regulated and subsidized by the government, exclusively to public sector fuel retailers. The diesel prices determined by government are artificially low and do not reflect the realities of the high crude and refined product prices.
For Shell, the pricing decision is influenced by a number of factors including:
- cost of bringing the fuel to the retail site (product and distribution costs)
- cost of running the service station (e.g. salaries, rent, utilities)
Q : Why have fuel prices increased compared to previous years?
A : The cost of crude oil and refined product have risen and therefore fuel prices have increased. The cost of crude oil and refined product are influenced by a number of factors, such as increasing oil demand, limits in refining capacity, seasonal demand for product and extreme weather events that have affected refineries or fuel supplies.
Q : Why do fuel prices vary in different countries?
A : The price of fuel in different countries is affected by:
- Cost of buying finished product in the country (country supplies usually cheaper than importing product)
- Government excise and tax rates
- Government subsidies for fuel
- Currency fluctuations
Q : How does the US exchange rate affect fuel prices in my country?
A : Since the world's major crude oil market is generally traded in US dollars, any variation between a country's exchange rate and the US dollar will impact the cost of buying crude oil in that country.
Q : Why doesn't Shell use its profits to subsidise fuel prices?
A : Higher crude prices have contributed to company revenues, but oil industry profit margins have been in line with those of other industries.
Furthermore, energy companies need to continually invest billions of dollars each year, over the long term, to safeguard the future of their business and to ensure a sustainable energy supply for consumers. Producing crude oil involves long-term and high-risk projects requiring billions of dollars investment over 20-30 years (developing a single new oil field can cost over $1 billion). Higher profits in some periods help safeguard investments when oil prices, and hence profits, are lower at other times.
Q : Can Shell use its influence to bring down the price of crude oil?
A : No. Shell only produces around 3% of the world's oil. The majority of the crude oil that is used in our refineries to make finished fuel products is bought on the open market. The price of crude oil is influenced primarily by:
- Increasing oil demand
- Limits in refining capacity
- Currency fluctuations
- Market speculation