As an energy sector expert with a focus on fuel economics, I can provide an in-depth analysis of why diesel is cheaper than petrol in India. The cost of fuel is influenced by a variety of factors including production costs, taxation policies, and market dynamics.

Firstly, the production cost of diesel is generally lower than that of petrol. Diesel is derived from the heavier fractions of crude oil, which are more abundant and thus less expensive to process. Petrol, on the other hand, is produced from lighter fractions that are more difficult and costly to extract and refine.

Secondly, taxation policies play a significant role in determining the price of fuels. In India, the government has historically subsidized diesel to support the agricultural sector and public transportation, which are major consumers of diesel. This subsidy reduces the tax burden on diesel, making it more affordable compared to petrol, which is taxed at a higher rate.

Thirdly, the demand and supply dynamics also affect fuel prices. Diesel is a preferred fuel for commercial vehicles such as trucks and buses due to its higher energy density and better fuel efficiency. This creates a larger market for diesel, which can sometimes lead to economies of scale that reduce costs.

Moreover, the use of diesel in agriculture is another factor. Since a significant portion of India's population depends on agriculture, and diesel-powered tractors and irrigation pumps are widely used, the government has an interest in keeping diesel prices low to support the farming community.

Lastly, environmental regulations can also influence fuel prices. While diesel engines are more efficient, they emit more pollutants than petrol engines. However, in India, the focus has been more on affordability and meeting the energy demands of a growing economy rather than on the environmental impact of fuel choices.

In conclusion, the lower price of diesel in India is a result of a combination of factors including lower production costs, government subsidies, demand and supply dynamics, agricultural use, and environmental considerations.

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Diesel is not cheaper then gasoline or petrol in all European and North American countries. In fact, it is generally more expensive compared to gasoline. Diesel is cheaper in India because it's believed to be generally used by farmers and truck and bus fleets (local and inter-city buses owned by state governments).read more >>