On 31 May, the Petrol Pump Dealers’ Association grandiosely announced that its members in 22 states will not purchase petroleum products from the Indian oil marketing companies.
Among others, two reasons were given: The first is the usual one – demand for a higher commission on sales.
The second and more topical one relates to the steep reduction in the price of petrol by Rs 8 and diesel by Rs 5 that resulted from the Union government’s steep cut in excise duties. The dealers reasoned that they incurred losses buying high and selling low.
This is a bit of a paradox: for years prices of petroleum products have been increasing; in fact, for several months last year, prices increased by the day. In this, petroleum dealers have been buying at low prices and selling at higher prices the next day! Poor consumers, not well-organised like the dealers, couldn’t protest.
In the past there were complaints of rampant adulteration. This practice seems to have declined. But there is still concern over short deliveries through tampered meters. While it is true the dealer margins at a fixed rate become low as a percentage on increasing prices. This has driven out large sections of the organised sector. Years ago, we had large companies like TVS operating petrol stations. One also had OMC-owned and run petrol stations. The one in Thousand Lights near the old Saffire theatre was a popular one for its assured quality and quantity. These have also vanished.
The high cost of real estate also resulted in a good number of petrol stations giving place to multi-storeyed buildings.
A more serious threat is bound to come from electric vehicles. On a visit to China in 2019 I noticed a massive shift of petrol-driven two-wheelers to electric vehicles. In India it is just starting now. An estimated 20 million two wheelers are sold annually. With a big switch of these to electric, there will be a sizeable drop in demand for petrol. Such shifts will also accelerate in regard to four wheelers. The drop in demand for petrol would then be substantial. It will be interesting to watch the oil marketing companies adjusting to this tectonic change. And also the legion of pump dealers experiencing a steep drop in demand for liquid fuel.
Please click the following links to read other articles of June 2022:
Russian petrol for western Europe and even the US!
A sleepy township morphs into an industrial hubA sleepy township morphs into an industrial hub
Everything gigantic in Dubai – Dubai Travel by SV
Sweet News on the Sugar Sector
Conference with New CII President Sanjiv Bajaj
Women forge ahead – Recent civil services examination
