Tuesday, October 13, 2009

Indian Oil Corporation: xtrapremium at what cost ?

We all know what Literacy is, but do you know what is Numeracy ?

Numeracy is the ability to understand the numbers (particularly with respect to Data or Statistics ) in correct perspective for a better understanding.

One can Make or Break any thing with the help of right (or wrong) use of numbers. All our politicians & economists know it :))

Generally I use xtrapremium petrol for my car as it results in lesser carbon deposit and higher mileage and overall smoother operation as claimed by Indian Oil Corporation. It is achieved by an additive and naturally there is a premium on it.

The cost difference is Rs 2.50 per litre of petrol in Bangalore. Normal Petrol is Rs 50.66 and Xtrapremium is 53.16 per litre.

Once while filling at the Petrol station a friend remarked "Oh that is 5 % more. Do you get 5% extra mileage ?"

Honestly I had no way of verifying this as city traffic conditions don't permit us a fair evaluation.

In a recent advertisement IOL claims 2.79 % improvement in fuel efficiency for their Xtrapremium. The first thought was "with drivers having diverse practices and idiosyncrasies this advantage is too thin and may not be realizable in most cases. Everyone knows that the results reported are under ideal test conditions and as such not effective in city driving.".

Then I recollected the reaction of my friend. Does it mean that I am getting only 2.79 % more mileage for using the premium petrol ? Am I paying 5 % more and get only 2.79 % advantage ? prima facie everyone seemed to agree.

My numeracy is under test ! Somehow I felt that our IOL energy experts cannot be that foolish to charge more for a lesser benefit. I decided to delve deep in to it. I did some quick calculations.

Say by filling 2 litre of normal petrol ( @Rs 101.32) I will be able to drive up to 32 Km whereas 2 litres of xtrapremium (@Rs 106.32) would take me additional 0.8928 Kms assuming 2.79% better mileage.

In terms of cost per Km of travel I incur Rs 3.166 with normal petrol and Rs 3.232 with xtrapremium. This is about 6.63 paise more per Km. If we interpret this data as % increase of cost (6.63/316) x 100 = 2.09 %

That's it. For a benefit of 2.79 % fuel efficiency the consumer is made to pay 2.09 % more. Nothing great but nothing much to complain also.

But what a way to realize this truth !! Does any average consumer have time to realize this fact through tortuous calculations? Most people would do what my friend did, jump to quick conclusion. Yes, most of us are still not numerate

To avoid such misgivings IOL's Advertisement needs to be more explicit in terms of cost economics -apart from making a simple statement of fuel efficiency.

It may be highlighted in terms of savings in billions of rupees to the National Exchequer or a qualified assessment of savings in maintenance cost of the vehicle (because of Friction Buster). These information must form as part of the body copy. Then there is a possibility of avoiding the misgivings that may arise in the common man's mind.

The success of communication lies in not giving room to further questions or doubts but proactively answer many that may arise while reading the message. From that point of view IOL's AD falls short of clarity though the fact has been furnished without exaggeration.

They may be congratulated for that as in World of Advertisement it is hard to find true reporting of facts.


Shrinidhi Hande said...

well written post...

Extra premium as chemical additives in petrol and carries higher octane number, because of which it is expensive.

IOCL and BPCL claim these high cost fuels improve engine life, but as I know vehicle manufacturers tweak engines to ensure that it survives normal and even adultrated fuel sold in India, so effect of xtra premium on engine life could be negligible



//...I know vehicle manufacturers tweak engines to ensure that it survives normal and even adultrated fuel sold in India ..//

This is a real news to me !!! :)
What a country we are in !
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