Come Friday, and there could be some cheer for the common man as oil marketing companies could effect a steep cut in petrol and diesel prices.
If one looks at the current fortnightly average prices of diesel and petrol, the retailers have a legroom to reduce diesel and petrol by about Rs 4 per litre each, although oil marketing companies are tight-lipped about a likely fuel price revision.
Considering current fortnight average free on board (FOB) prices of diesel ($62.13 per barrel) and petrol ($70.48 per barrel) and currency average of rupee versus US dollar of 63.75, diesel over recovery comes to Rs 3.99 per litre, and petrol over recovery comes to Rs 4.17 per litre.
The final call would of course be taken by the three oil marketers Indian Oil Corp (IOC), Bharat Petroleum Corp and Hindustan Petroleum Corp based on commercial considerations.
IOC, the largest of the three companies, when contacted declined to comment.
On July 16, the base diesel and petrol prices were reduced by Rs 2 per litre, although some states, including Delhi raised local taxes, which nullified this reduction. While diesel sells in Delhi for Rs 49.72 per litre, petrol sells for Rs 66.90 per litre.
Over recovery refers to the amount that the fuel retailers make over and above the cost plus the profit margin. Thus, the quantum of the final cut would depend on how much of these over-recoveries are passed on to the retail consumer.