Gasoline and diesel usage and pricing

These days I see a lot of forward mails on fuel price comparissions , people are cursing Indian government for levying huge taxes on fuel and gasoline products. Below is the mail for reference.

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Dear Friends!
Petrol in Pakistan Rs17 per litr
Malaysia Rs 18 per litr
In India it's Rs.59 per litr
Why is there a difference within India itself? World Market CRUDE Oil is not
the reason for this. It's all Gain for private owners? As we are the
general public, or Common Man as R.K.Laxman wud hv said, we have to
raise our voice, let's raise thru Emails.
Forward this to all Indians who care.
IT HAS BEEN CALCULATED THAT IF EVERYONE DID NOT PURCHASE A DROP OF
PETROL FOR ONE DAY AND ALL AT THE SAME TIME, THE OIL COMPANIES WOULD
CHOKE ON THEIR STOCKPILES.
AT THE SAME TIME IT WOULD HIT THE ENTIRE INDUSTRY WITH A NET LOSS
OVER 4.6 BILLION DOLLARS WHICH AFFECTS THE BOTTOM LINES OF THE OIL
COMPANIES.
THEREFORE "June 14 th" HAS BEEN FORMALLY DECLARED
"STICK IT UP THEIR BEHIND " DAY AND THE PEOPLE OF THIS NATION SHOULD
NOT BUY A SINGLE DROP OF PETROL THAT DAY.
THE ONLY WAY THIS CAN BE DONE IS IF YOU FORWARD THIS E-MAIL TO AS
MANY PEOPLE AS YOU CAN AND AS QUICKLY AS YOU CAN TO GET THE WORD
OUT. WAITING ON THE GOVERNMENT TO STEP IN AND CONTROL THE PRICES IS
NOT GOING TO HAPPEN. WHAT HAPPENED TO THE REDUCTION AND CONTROL
IN PRICES THAT THE ARAB NATIONS PROMISED TWO WEEKS AGO?
REMEMBER ONE THING, NOT ONLY IS THE PRICE OF PETROL GOING UP BUT
AT THE SAME TIME AIRLINES ARE FORCED TO RAISE THEIR PRICES,
TRUCKING COMPANIES ARE FORCED TO RAISE THEIR PRICES WHICH AFFECTS
PRICES ON EVERYTHING THAT IS SHIPPED. THINGS LIKE FOOD, CLOTHING,
BUILDING SUPPLIES MEDICAL SUPPLIES ETC. WHO PAYS IN THE END? WE
DO!
WE CAN MAKE A DIFFERENCE.IF THEY DON'T GET THE MESSAGE AFTER ONE
DAY, WE WILL DO IT AGAIN AND AGAIN. SO DO YOUR PART AND SPREAD THE
WORD. FORWARD THIS EMAIL TO EVERYONE YOU KNOW. MARK YOUR
CALENDARS AND MAKE June 14 th
A DAY THAT THE CITIZENS SAY
"ENOUGH IS ENOUGH"
We forward so many junk email to many of our friends, now let us do
it for some useful cause to cut down the price of the petrol .. ...

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This is my humble request to all those who are spreading this e-mails. Please don't believe such mails blindly. Kindly go through the German Technical Cooperation (GTZ) report on the worldwide gasoline prices. Have faith in our government. Also I would like to mention that the gasoline prices in India is very less as compared to Asian countries. Reason behind this is to help common man - by not letting him affected for his basic needs.

reference - http://en.wikipedia.org/wiki/Gasoline_usage_and_pricing

How a credit card works

How a credit card works when you shop….??
[A small situation to make us understand the funda…]

Priya: I want to buy a Sony digital camera costing Rs.20,000, but I don't have any cash right now.

Alok: Why don't you use your ICICI Bank credit card? Never heard them say? We are there ??

Priya: I am quite skeptic about using these cards. I pay using the card; get a bill after 30 days and pay after another 20 days. This is a maximum of 50 days interest free loan. Why does any bank do it?

If I borrow Rs.20,000 on personal loan at 11%.
Interest to be paid for 50 days = Rs. 20,000 * 11% * (50/365) = Rs. 301.40.

Here the bank is giving me a loan without interest when I use the credit card. Something is wrong somewhere!


Alok: Well? let me tell you how it works when you use your card to pay for the camera.
· You present your ICICI Bank credit card? a Master Card.
· Sony World swipes your card on a machine provided by Citibank. Let's call Citibank? The acquirer bank and the process of Sony World swiping the card on that machine? Requesting authorization.
· Citibank communicates with the card issuer? ICICI Bank through Mastercard Network to check if the card is valid and has the required credit limit.
· ICICI Bank reviews and approves / declines which is communicated back to Sony World.
· You sign a receipt called Sales Draft given by Citibank. This is the obligation on your part to pay the money to ICICI Bank. Data on this receipt can be captured electronically and transmitted.


At the end of day or at the end of some period Sony World chooses:

o Sony World submits the receipt you signed to Citibank who pays Sony World the money. Sony World pays Citibank a fee called Merchant Discount. Let us say this is 6% of the sale value = 6% * 20,000 = Rs. 1200

o Citibank sends the receipt electronically to a MasterCard data center which in turn sends it to ICICI Bank.

o ICICI Bank transfers the money to a settlement bank which in turn transfers the funds to Citibank.

o Citibank pays ICICI Bank an Interchange Fee of 4% of the sale value = 4% * 20,000 = Rs. 800

o 20 to 50 days later ICICI Bank gets the money from you ? and you don't pay the interest!!


Priya: Interesting! So Sony World pays more than the interest that I should have paid for the loan that I take. I, as a cardholder have the following benefits

1. Convenience of not having to carry cash.
2. Credit availability? Free of interest.


However what benefits does Sony World get for paying so much money? Isn't it more profitable for them to take cash? They can save as much as Rs.1200.

Alok: Certainly. Some retail outlets offer you discounts if you pay by cash, don't they?

However when you don't count the money that you are spending, you tend to buy more! Cards encourage this? Called impulse purchase.

If you did not have access to credit, you would not have bought the camera this month ? or may be not any time soon either. By accepting cards, the merchant is actually extending you credit at the risk of the card issuer. He pays money to the banks to carry that risk.

Priya: So ICICI Bank uses this money to pay back to us when they announce 5% cash back. They insist that the Sales draft that I sign at the retailer should also be from ICICI Bank. This means they are saving on the Interchange Fee and also pay me a part of the Merchant Discount that they get.

Alok: Exactly! If you have noticed, ICICI Bank gives you the cash back in the next credit card statement. They keep the Cash back Money for a maximum of 60 days before passing on a part to you. This accrues them interest too.

Say if ICICI Bank earns an interest of 6% per annum for the cash they carry ? they get Rs.1000 * 6% * (60/365) = Rs. 10

That is not huge, but money nevertheless. And when you consider that almost everyone in this city shops with a credit card these days, it is a big sum.

Priya: And that also explains why banks tie up with petrol pumps like ICICI Bank has tied up with HPCL and I could re-fuel there without having to pay the fuel surcharge of 2.5%. The card issuer and the acquiring bank is the same and that saves interchange fees.

Priya: Sooper! Then lets go for shopping ?? Let's not miss this Christmas and New year Shopping Festival!


[All the numbers used to explain concepts in this article must be treated only as an example. Merchant Discounts may vary from bank to bank. Interchange Fee is regulated by VISA and MasterCard]
[ Also these days one can avail the balance transfer facility provided by Banks, where you can pay the credit card bills by another credit card and thus gaining more time for repay ]