High crude prices may be fattening profits at oil companies around the world, but in India state-controlled refiners and retailers are losing money hand over fist. In the fiscal year that ended in March 2006, those companies lost a combined $8.6 billion. And Merrill Lynch (Charts) estimates they will lose another $12 billion to $20 billion this year.

The reason: government price controls on gasoline, diesel and cooking fuels. "Today we are selling gasoline at 8 cents a liter below cost, diesel at 17 cents a liter below cost and kerosene at 39 cents a liter below cost, to retail customers," says N. Srikumar, a spokesman for Indian Oil, the country's largest refiner, which reported its first quarterly loss, on revenues of $41 billion, last year.