Why do the people of Andhra Pradesh have to pay more for fuel than in Uttarakhand? This has been a burning question for a while now. The current petrol price in Andhra Pradesh is ?111.38/litre, while that of diesel is ?99.42. On the other hand, the current petrol price in Uttarakhand is ?95.28/litre, while diesel is priced at ?90.90.
The difference of approximately ?15 for petrol between the two states and ?9 for diesel is major. Differing state taxes, infrastructure, and fuel transportation costs all contribute to driving up prices. Hence, many such factors lead to fuel price disparity between states within the country.
Factors why fuel price in Andhra Pradesh is higher compared to Uttarakhand
Let us delve into the various reasons why fuel prices differ significantly between the states of Andhra Pradesh and Uttarakhand.
Tax Structure
We know that the central government levies tax on fuel. But that is the same for all states. Apart from that, the state governments have the right to impose taxes on fuel. This tax differs from state to state.
Andhra Pradesh government has imposed a VAT of 31% on petrol.
Uttarakhand government has levied VAT of 16.97% on petrol.
We can see that the VAT charges are almost double in Andhra Pradesh, resulting in higher fuel prices. Also, excise duty and road cess are higher in Andhra Pradesh, indirectly affecting the fuel price.
Transportation costs
Fuel at the pumps has to be brought in from refineries. Thus, the distance between refineries and the various pumps in the state also impacts the fuel price.
Andhra Pradesh is far from refineries, so fuel transportation costs increase. Along with this, the road infrastructure, storage facilities, and logistics network also impact the overall transportation costs. The higher transportation costs in Andhra Pradesh contribute to the higher fuel prices in the southern state than in Uttarakhand.
Demand-supply dynamics
Compared to Uttarakhand, Andhra Pradesh has more populated. This pushes the demand for fuel. Since the refineries are far from Andhra Pradesh, it is not easy to get the fuel into the state. Thus, it takes time to bridge the demand-supply gap.
We know that if the demand for a particular product rises, its price rises when the supply is insufficient. This is what happens here.
In the case of Uttarakhand, the population is lower than Andhra Pradesh so fuel consumption is also less. And because it is closer to the refineries, its requirements can also be easily met.
Moreover, Andhra Pradesh is experiencing tremendous industrial development. Thus, it requires more fuel than Uttarakhand. The increasing demand for commercial use is also adding to the burden on fuel prices.
Infrastructure
Suitable infrastructure is essential for the smooth transport of fuel to the pumps. Andhra Pradesh doesn't have a well-developed pipeline structure for easy fuel transportation. Thus, it has to pay more. On the other hand, Uttarakhand has better infrastructure and logistics, so it enjoys lower transportation costs, resulting in lower fuel prices.
Dealer's Commission
Market competition is another factor that determines prices. Since Andhra Pradesh has more petrol pumps, fierce competition among oil companies leads to a spike in prices. Oil marketing companies determine dealers' commissions, which may result in varying prices among petrol pumps.
On the contrary, since the fuel demand is less in Uttarakhand, petrol pumps are also less, and so are the competition and the fuel prices.
Crude Oil price
The price of crude oil is subject to constant fluctuations influenced by market conditions, which in turn has a significant impact on petrol prices. Various factors contribute to these fluctuations, including the dynamics of demand and supply, international political situations, oil reserves, and supply levels.
The delicate balance between these elements ultimately determines the cost of crude oil. Changes in global demand for petroleum products, such as gasoline and diesel, alongside geopolitical tensions and conflicts, production disruptions, and economic factors, all play a role in shaping the ever-changing landscape of crude oil prices.
Conclusion
The global crude oil charges, currency exchange rates, amount of fuel imported, government regulations, environmental policies, and many other factors are responsible for increasing fuel prices. Also, the states' demographics are one important factor to be considered.
To keep a check on the fuel price of your state visit the fuel price page on Park+. Park+ provides car owners with a diverse array of services, including car parking assistance, traffic challan tracking, FASTag recharge, used car trading, and more. You can download the Park+ app for regular updates, or visit the Park+ website to learn more about cars.