A Study on Factors Affecting Petroleum Prices, and Pricing of Petroleum Products Under GST

Petroleum products are products which have been processed from crude oil (Petroleum).Petroleum products include a large number of products like Petrol, Diesel, Liquefied Petroleum Gas (LPG) Kerosene, Asphalt, Paraffin wax, Tar, Plastics, Propane, Sulfur, lubricants, and wax.Each of these products is formed in the process of refining the cured oil.The main aim of refining is to get the main products like Petrol, Diesel, Liquefied Petroleum Gas (LPG) Kerosene, Asphalt, Paraffin wax, and Tar.But some by-products are also formed in the process this includes Plastics, Propane, Sulfur, lubricants, wax, etc.The price of each product is different from each other.Some products may cost more than the other product this is due to the allocation of joint cost.Joint cost is the cost which has been incurred for producing the products.Mainly it includes the cost until the point of split off.After that, the resulted products may further be processed and sold in the market.The market price of petroleum products is affected due to many factors in the business environment.Some of the factors affect all petroleum products or otherwise only a few petroleum products.For example change in the price of crude oil and exchange rate will affect the pricing of all petroleum products.Whereas a change in the further processing cost of a product will affect the pricing of that specific product.The price of petroleum products are changing in day-to-day bases this is due to the transition from Administrative pricing mechanism (APM) to Market Determined Price Mechanism (MDPM).In APM the price is fixed by the administrative authority of the country i.e. the Government will be fixing the price.But at present, the price is fixed by the manufacturing companies so they are adjusting the price as they want.At present the taxation policy of petroleum products is under the Value Added Tax (VAT).Almost all other products and services are coming under Goods and Service tax (GST).