What are petrol, diesel, and crude oil?
Petrol and diesel are made from a substance known as crude oil. It is present in different quantities around the world. Crude oil is turned into petrol and diesel in oil refineries. These are used in vehicles such as cars and bikes and even in machines used in factories.
Who decides the prices we pay at petrol pumps?
Large companies known as oil marketing companies (OMCs) buy petrol and diesel from refineries. They sell this to dealers, who eventually sell petrol to us. Before petrol and diesel are sold to us, the dealer adds the taxes charged by the government to their price. The price at which petrol or diesel is sold to us is a total of: (1) the price at which OMCs purchase oil from refineries;
(2) the price at which the dealer buys petrol and diesel from the OMCs; and
(3) the taxes charged by the government.
Why were petrol and diesel prices in the news?
Petrol and diesel prices are currently the highest they have ever been. They are also said to continue to rise in the future. Most of the increase in prices is caused due to the government taxes on petrol and diesel.
What is the result of high petrol and diesel prices?
Petrol and diesel are important for everyone. An increase in the price of petrol and diesel means that more money will have to be spent sending things from one place to another. This means that items like soaps, shampoos, vegetables, and many other things which are transported in trucks can get more expensive.
