Because of this, we are forced to import from other markets. Other markets abroad like Russia have higher import rates. This is one contributing factor to the increased price of diesel fuel. Bizarrely the UK is the only developed Country whereby diesel is the more expensive of the two fuels. Even in neighbouring Ireland, the price of unleaded is higher than diesel. So why are British motorists being forced to pay more for diesel fuel when seemingly everyone else in the world gets it cheaper?
The Telegraph produced this excellent graphic which shows the gap between petrol and diesel in various Countries around the world. There are more drivers of unleaded vehicles than there are drivers of diesel vehicles. Appealing to the majority is key business mathematics. Not only that, more diesel is sold in the UK than petrol.
This is due to the volume of commercial vehicles in the UK using diesel power. Business motorists are less likely to shop around for better forecourt prices and therefore retailers increase the price to make a bigger profit. As diesel is the primary fuel used by commercial vehicles in the UK the additional cost is a heavy burden upon businesses and small business owners. In a recovering economy, penalising the businesses who provide services and employment to aid in economic recovery seems counterintuitive but it all boils down to profits.
Put simply, diesel is more expensive than petrol because fuel retailers have found a solution to making big additional profits without the risk of losing customers.
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Car owners need to shell out extra for getting their diesel cars in service. A car owner having a diesel car no older than five years is highly unlikely to take their vehicle for service. The extra cost incurs with repairs and parts replacement in cases of theft. It all depends on the car owner. They are the final authority on deciding the amount of the insurance money.
The car owner needs to make the right decision regarding the insurance of their vehicle. The diesel cars are far ahead in many things than petrol cars. It is the decision of the car buyer about buying a car offering performance or helping them save money. Driving Tips. Maintenance Tips. Car Review. Car Comparison. Industry knowledge. Interestingly, even in India the base price of diesel is more expensive than petrol. This has been the case for a long time but retail prices of petrol came higher than diesel due to central and state taxes.
Nifty 17, Zomato Ltd. Market Watch. ET NOW. Brand Solutions. Video series featuring innovators. ET Financial Inclusion Summit. Nearly 70 percent of the price paid by the consumer for a litre of petrol or diesel is towards taxes excise duty and VAT. There has been a noticeable price disconnect between the global crude and the retail charts of petrol and diesel here over the past few months.
Despite a sharp correction in prices globally, retail prices remained high here. There was negligible correction in retail fuel prices from March to May when global Brent was slipping. Now that Brent crude prices have started building up, fuel retail prices are boiling. Initially the retail price graph turned steady as the hike in excise duty was being made up for by the drop in crude oil prices.
Because of this, the retail prices of petrol and diesel have also started moving up, reflecting the global trend. The sharp rise in excise duty and marketing margins is keeping the retail fuel prices high. A steep revision in excise duty and intrinsically higher base price of diesel are the main reasons why diesel is costlier than petrol.
While OMCs had jacked up their marketing margins during March-May, the current marketing margins seem to fall nearer to their long-term average. Given the hit on overall demand, OMCs have little cushion but to raise prices in order to absorb the rise in global prices.
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