Fuel is the heart of transportation. So, whether you want to move from one place to another or want your goods to move- you need fuel. Thus, we understand that fuel is essential even for running a business.
Since fuel is a daily necessity, it's essential to know why fuel prices differ from place to place, even if the country is the same.
When we study the fuel price in India, we understand that every state has a different fuel price. Why does this happen? There are many factors responsible for the change of prices in fuels.
Reasons why Andhra Pradesh has to pay a higher fuel price
Andhra Pradesh pays higher fuel prices due to factors like taxes, transportation costs, and market dynamics impacting supply and demand.
Distance from Refineries
The fuel cost also depends on the transportation cost of the fuel from the refinery.
Assam has easy access to nearby refineries, whereas Andhra Pradesh does not. Thus, Andhra Pradesh has to pay more for fuel transportation from refineries.
Assam has a well-developed transportation infrastructure to keep fuel prices in check. But Andhra Pradesh depends on pipelines and tankers, increasing the price.
State Subsidies
Assam and Andhra Pradesh are different states run by different state governments. Thus, the benefits provided by the states are also different.
Assam pays a tax of 20.67% on petrol and 19.28% on diesel. On the other hand, Andhra Pradesh pays 31% tax on petrol and 22.25% on diesel.
Assam has more subsidy programs and policies to help keep fuel prices lower. But, Andhra Pradesh needs extensive subsidies or correct implementation. This leads to higher fuel prices in Andhra Pradesh.
Andhra Pradesh has higher state taxes, including excise duties and sales tax, than Assam. Thus, the fuel price in Assam is lower compared to Andhra Pradesh.
Infrastructure Development
You need infrastructure for the storage and transportation of fuels. Thus, it would help to have storage areas, pipelines, and distribution networks. It is not a one-time cost since you also have to maintain them. These maintenance costs also add up to the fuel prices.
Andhra Pradesh needs a proper fuel infrastructure setup like Assam, so operational costs are also higher. This cost is ultimately passed to the people to pay through higher fuel prices in Andhra Pradesh.
State Economic Conditions
Andhra Pradesh has higher economic development or income ratio is more. This results in higher fuel consumption.
So, Andhra Pradesh pays higher because of the inflation and fiscal deficits. But Assam has a more favourable economic environment. Hence, the fuel price is stable.
Demand-Supply Gap
While understanding the market dynamics, we know the price increases whenever the product's demand increases. So, since Andhra Pradesh is already urbanised, it has a higher fuel consumption rate. This rate increases the demand.
As we saw above, Andhra Pradesh needs a proper infrastructure to supply the fuel. Thus, it cannot meet the market's demand, leading to higher fuel charges.
Assam has a more balanced supply system that meets the demand, so the fuel price in Assam is lower than in Andhra Pradesh.
Conclusion
In conclusion, we now understand the factors that play a significant role in deciding the fuel charges across different states. However, these are not the only reasons for fluctuating fuel prices.
Other factors like international crude oil prices, market competition, local attitudes, administrative regulations, and import policy also play a role in the changing fuel prices.
The best way to check for the current fuel price is Park+. Visit its website or download the Park+ app to get all the details regarding fuel prices in different states across India. You also learn about cars, insurance, parking, fuels, challans, and more by downloading this app. You can keep checking the fuel prices of different states too.