Oil surge spoils plan to cut fuel prices | business | Hindustan Times
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Oil surge spoils plan to cut fuel prices

Rising global crude oil prices, which after plunging to $35 per barrel barely a month back have again crossed the $50 a barrel mark, are playing spoilsport in the Congress-led UPA government’s plans to reward its voters by further reducing the petrol and diesel prices each by one more rupee.

business Updated: Mar 30, 2009 20:35 IST
Anupama Airy

Rising global crude oil prices —which after plunging to $35 per barrel barely a month back have again crossed the $50 a barrel mark — are playing spoilsport in the Congress-led UPA government’s plans to reward its voters by further reducing the petrol and diesel prices each by one more rupee.

A recent Petroleum Ministry note for the cabinet confirms that the government was contemplating another round of cuts in the petrol and diesel prices. If announced, this would be the third reduction after the two successive cuts already announced in the price of petrol and diesel in December 2008 and January 2009 by Rs 10 per litre and Rs 4 per litre, respectively.

Petroleum minister Murli Deora told the Hindustan Times, “As of now, there are no plans to bring down fuel prices.” Asked to comment on the cabinet note, he said, “The proposal to further reduce prices was just the recommendation of a committee but no cut is possible at this juncture.”

Any reduction in fuel prices announced close to the Lok Sabha polls, would have benefited the vote bank of the UPA government. However, government sources said that with global crude oil prices crossing $50 a barrel, the government is not in a position to implement any cut in fuel prices.

More so, at current crude oil prices, oil companies are slipping into losses again on petrol and the profit margin is almost negligible in the case of diesel. A month ago, the oil companies were making a profit of over Rs 3 a litre on diesel and around 50 paise on petrol.

“This (the rise) will make it difficult for the government to justify its act before the Election Commission, whose permission is a must to implement any such decision in public interest,” said a senior Petroleum Ministry official.