There are a few factors that can influence the retail price of diesel fuel. These include:

The cost of crude oil: Diesel is made from crude oil, so the price of crude oil can have a big impact on the price of diesel.

Taxes and fees: Many governments impose taxes and fees on diesel fuel, which can add to the retail price.

Transportation costs: The cost of transporting diesel fuel from the refinery to the retail location can also affect the price.

Market demand: If there is strong demand for diesel fuel, the price may be higher.

Competition: Retailers may also consider the prices being offered by their competitors when setting the price for diesel fuel.

Retail prices for diesel fuel can vary significantly from one region to another, due to differences in these factors. For example, diesel fuel may be more expensive in a region with higher taxes or transportation costs.

In some cases, retailers may use pricing algorithms or software to help determine the retail price of diesel fuel. These algorithms may take into account a variety of factors, including the cost of crude oil, the price of diesel fuel in neighboring markets, and the retailer's own costs and margins.

Overall, the retail price of diesel fuel is determined by a complex set of factors, and it can be influenced by both local and global market conditions.

In India, the retail price of diesel is determined by a combination of the cost of crude oil, taxes and duties, and the cost of distributing and selling the fuel. The price can be calculated by adding up the price of crude oil, processing costs, profit margins of the oil marketing companies, freight costs, excise duty and the different taxes levied by central and state governments.

So here is the list of costs that sum up to determine the retail price of petrol-

- Cost of Crude oil

- Processing cost to extract petrol from crude oil by oil marketing companies

- Profit margins of oil marketing company and dealers’ commission*

- Transportation and freight costs

- Excise duty imposed by the central government

- VAT (Value added tax) imposed by state governments**

* The commission varies a little with the location of fuel pumps. For instance the dealer commission for diesel is Rs 2.56 on an average in Delhi.

** Different states impose VAT at different rates thus, the price of diesel varies from state to state.

High speed diesel (HSD) is a type of diesel fuel that is used in vehicles with high-speed diesel engines, such as trucks and buses. In India, HSD is also known as "diesel oil" or "furnace oil." It is used in a variety of applications, including as a fuel for vehicles, as a heating fuel, and as a power generator.

HSD in India is generally of a higher quality than regular diesel fuel, as it is formulated to meet the specific needs of high-speed diesel engines. It typically has a higher cetane number, which measures the fuel's ignition quality, and a lower sulfur content, which reduces emissions.

HSD is regulated by the Indian government and must meet certain quality standards. The price of HSD in India is typically higher than that of regular diesel fuel due to the higher quality of the fuel.

Bio diesel is a renewable fuel made from plant-based feedstocks, such as vegetable oils and animal fats. In India, bio diesel is seen as an alternative to fossil-based diesel fuel and is promoted as a way to reduce dependence on foreign oil and to lower greenhouse gas emissions.

The Indian government has implemented a number of policies to support the production and use of bio diesel in the country. Some of these policies include:

National Biofuel Policy: This policy, which was introduced in 2009, aims to increase the production and use of biofuels in India, including bio diesel. It sets targets for the blending of biofuels with fossil fuels and provides incentives to encourage the production and use of biofuels.

Biofuel Cess: The Indian government imposes a "biofuel cess" on fossil fuels, including diesel, to encourage the use of biofuels. The revenue from this cess is used to fund biofuel development and research in the country.

Biofuel Purchase Obligation: The Indian government has also implemented a "biofuel purchase obligation" requiring oil marketing companies to purchase a certain percentage of their diesel from biofuel producers. This is intended to create a market for biofuels and encourage their production.

Overall, the Indian government has implemented a number of policies to support the development and use of biodiesel in the country, with the goal of reducing reliance on fossil fuels and promoting the use of renewable energy sources.

Bringing petrol under the GST would effectively mean reducing taxes on it. The highest tax slab under the GST is 28%, while fuels such as petrol and diesel are taxed at more than 100% as of now.

To understand the politics of taxation of petrol and diesel between the center and the state, we need to understand the difference between the taxation mechanisms of the two.

The Central government taxes the fuels at a specific rate using various duties and cess while states use a combination of specific and ad- Valorem rates to tax the fuels. Center shares 41% of its collection with states while states add the whole collection to their respective exchequer.

Both, the Central government, as well as the state governments, do not want to compromise with the present tax collection from petrol and diesel since they form a large part of the state revenue. In addition to that, states do not want the center to hold sole power over the decision of tax rates of petrol and diesel since in the present tax regime they enjoy the benefit of a dynamic rate giving them the liberty to adjust their collection.