Petrol, diesel costlier today, even as international oil rates slump
The latest revision of India’s domestic fuel rates has made petrol costlier by ₹10.16 per litre and diesel by ₹8.89 a litre since May 4, a day after the results of five assembly polls were declared
The surge in auto fuel rates continued unabated for the 37th time in 66 days with fuel retailers raising petrol price by 35 paise per litre and diesel by 9 paise on Thursday. Even as international oil prices fell sharply by over 5.5% in the last three days, pump prices of petrol and diesel moved in the opposite direction.
The latest revision of India’s domestic fuel rates has made petrol costlier by ₹10.16 per litre and diesel by ₹8.89 a litre since May 4, a day after the results of five assembly polls were declared. Petrol is now priced at ₹100.56 per litre and diesel at ₹89.62 a litre in New Delhi.
While fuel rates of state-run Indian Oil Corporation (IOC) in Delhi are the benchmark for the entire country, retail prices of the two fuels differ from place to place because of variations in state taxes and local levies. Petrol prices already crossed ₹100 per litre in five metros – Delhi, Mumbai, Chennai, Kolkata and Bangalore on Wednesday.
The cost of a litre petrol in the financial capital is now ₹106.59 a litre and diesel, ₹97.18 a litre. The highest fuel rates have been recorded in Rajasthan’s Ganganagar where pumps are selling petrol at ₹111.87 per litre and diesel at ₹102.87 a litre.
Surging international oil rates and exorbitant domestic tax structure are two key reasons for high rates of petrol and diesel in pumps. Domestic fuel retailers align pump prices of petrol and diesel with their respective international benchmarks of previous day, which often move in tandem with crude oil rates.
International crude oil prices tumbled after an inconclusive meeting of producers’ cartel -- the Organisation of the Petroleum Exporting Countries and its allies, including Russia (together known as OPEC+) over supply cuts.
Benchmark Brent crude fell from $77.16 a barrel on Monday, its highest since October 2018, to $72.93 a barrel on Thursday during early trade, losing about 5.5% in the last three days.
India imports more than 80% crude oil it processes, hence international oil prices impact pump rates of auto fuels. Exorbitant taxes are the other reason for high rates of petrol and diesel.
In Delhi, central levies account for 33.29% of petrol’s price and state taxes, 23.07%, according to official data of July 1. On diesel, central taxes are over 35.66% while state taxes are about 14.62%. Through 2020, as global crude prices fell, the central government raised excise duty on the fuel to shore up its finances. States too followed suit -- with revenues hit on account of the pandemic.
The unrelenting upward movement of fuel rates since May 4 already saw petrol crossing the ₹100 mark in various cities across the country, particularly in states and UTs of Maharashtra, Rajasthan, Andhra Pradesh, Madhya Pradesh, Karnataka, Telangana, Odisha, Manipur, Jammu & Kashmir, Ladakh, Punjab, Bihar, Kerala, Tamil Nadu and West Bengal.
Some of the cities selling petrol for over ₹100 per litre are Mumbai, Ratnagiri, Parbhani, Aurangabad, Jaisalmer, Ganganagar, Banswara, Indore, Bhopal, Gwalior, Guntur, Kakinada, Chikmagalur, Shivamogga, Hyderabad, Leh, Imphal, Kalahandi, Sopore, Baramulla, Patna, Salem, Thiruvananthapuram, Mohali and Darjeeling.
Even as international oil prices saw volatility since May 4, pump rates of auto fuels in India moved only in the upward direction. For instance, despite Brent crude had plunged to $65.11 on May 20, the lowest in these 46 days; petrol and diesel rates went up the next day by 19 paise per litre and 29 paise a litre, respectively.
According to executives working in state-run oil marketing companies, pump prices are also high because companies were recovering their past revenue losses like the one suffered for 66 days since February 27 when rates were not raised because of assembly elections in four states and one Union Territory.
During the 66-day pause on rate hike, state-run retailers had also reduced politically sensitive petrol and diesel rates by 77 paise and 74 paise a litre, respectively in four small steps. But, the entire gains to the consumers were quickly reversed in the first four consecutive rounds of rate hikes starting from May 4.
The government deregulated the pricing of petrol on June 26, 2010 and diesel on October 19, 2014. Accordingly, state-run retailers are free to change pump prices every day. Public sector retailers — IOC, Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL)— controls almost 90% of the domestic fuel retail market.