The fuel prices in India are changed daily while fuel prices also vary from one state to another. The variation is caused by several factors like local taxes, geographical distance and terrain harshness. Even the states that are neighbours and share a border, like Arunachal Pradesh and Assam, have a variation in fuel prices.
The fuel is costlier in Arunachal Pradesh than it is in Assam. Here are the reasons and factors that influence this variation in fuel prices in Arunachal Pradesh and Assam.
Factors Why Fuel Costs More in Arunachal Pradesh than in Assam?
Of course, there's no one factor responsible for the variation in fuel prices in Arunachal Pradesh and Assam. The prices are influenced by a variety of factors. Here is an explanation of what makes fuel costlier in Arunachal Pradesh as compared to Assam.
A proper understanding of the factors that make fuel costlier in Arunachal Pradesh as compared to Assam will also help you in understanding the overall fuel price dynamics. Here are the different factors that influence the fuel cost in Arunachal Pradesh and make it costlier in comparison to Assam.
Transportation costs
Arunachal Pradesh is comparatively farther from the main refineries than Assam. Also, Arunachal Pradesh has uneven terrain. Thus, it makes fuel transportation difficult. Because of the state's hilly area, developing proper road connections in remote areas is impossible.
Thus, transportation costs increase because of a lack of transportation means and limited road connectivity, resulting in higher fuel prices in Arunachal Pradesh. However, this is not the problem in Assam. So, Assam doesn't have to comparitively pay much for fuel transportation, making the fuel cheaper in this state.
Demand supply dynamics
Arunachal Pradesh has less population, so the fuel demand is also limited. But the people selling fuel have to earn money for their survival. With limited demand for fuel, it becomes difficult for them to earn their bare minimum. They cannot offer discounts. So, they increase the price to earn more.
On the other hand, Assam has a higher population, so the fuel demand is also higher which creates a scope for discounts. Also, a stable economy in Assam helps manage competitive pricing.
Infrastructure problems
Arunachal Pradesh needs more fuel storage capacity and distribution infrastructure. The state's inadequate storage facilities make it challenging to stockpile fuel during periods of lower demand or when prices are relatively lower.
Moreover, the distribution network in Arunachal Pradesh is less well-developed than in Assam, resulting in higher operational costs for fuel distributors. These infrastructure challenges add to the overall fuel cost, increasing Arunachal Pradesh fuel prices.
Market size and demand
As we know, Arunachal Pradesh has a limited demand for fuel. So, the fuel suppliers pay less attention to their needs. For economic benefits, the fuel suppliers prioritise the demands of the states with higher demands.
Moreover, since Arunachal Pradesh wants fuel in less quantity, it also gets lower volume discounts. Ultimately, the fuel price rises. Assam's situation is the opposite, so they don't have to pay more for fuel.
Storage facilities
Arunachal Pradesh has limited storage facilities for fuel compared to Assam. Limited storage capacity can result in higher costs for maintaining and managing fuel stocks. These additional costs are passed on to the consumers, increasing fuel prices.
Conclusion
A plethora of factors result in the higher fuel prices in Arunachal Pradesh than in Assam. The uneven terrain is one of the major factors why Arunachal Pradesh faces problems and cannot even set up proper infrastructure for easy fuel transportation.
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