Prices rise again: Petrol costlier by 4.09/lt, diesel by ₹4.65/lt since May 4

The unidirectional upward movement this month saw petrol breaching ₹100 mark in various cities across the country, particularly in Maharashtra, Rajasthan, Andhra Pradesh and Madhya Pradesh

Petrol rates jumped by 26 paise per litre on Tuesday and diesel by 23 paise, the seventeenth hike in less than a month as international oil prices rallied on demand optimism and prospects of continued supply squeeze by producers’ cartel Organisation of the Petroleum Exporting Countries and its allies (OPEC+).

Representational Image. (File photo)

Petrol is now costlier by ₹4.09 a litre and diesel by 4.65 across the country since May 4, a day after results of five assembly polls were declared and fuel rates continuously moved up in one direction only.

The unidirectional upward movement this month saw petrol breaching ₹100 mark in various cities across the country, particularly in Maharashtra, Rajasthan, Andhra Pradesh and Madhya Pradesh. Some of the cities selling the fuel for over ₹100 per litre are Mumbai, Ratnagiri, Parbhani, Aurangabad, Jaisalmer, Ganganagar, Banswara, Indore, Bhopal, Gwalior, Guntur and Kakinada.

While petrol and diesel are being sold at record rates across the country, Mumbai has the highest rates among metros. Petrol is currently sold at ₹100.72 per litre in the financial capital and diesel at ₹92.69. Pump prices of petrol and diesel in Delhi on Tuesday also made a new record of ₹94.49 per litre and ₹85.38 a litre, respectively.

While fuel rates 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.

Surging international oil rates and exorbitant domestic tax structure are two key reasons for high rates of petrol and diesel in pumps.

Benchmark Brent crude breached the $70 level on Tuesday morning. It jumped 1.21% to $70.16 a barrel on the early trade on anticipation of demand recovery and tightening of supply by OPEC+ ahead of its crucial meeting.

Indian fuel retailers align pump prices of petrol and diesel with their international benchmark rates of previous day. Even as international oil prices saw volatility in May, pump rates of auto fuels in India moved only in the upward direction.

Fuel prices today (IOC)

Pump prices of fuels are also high because of taxes. In Delhi, central levies account for 34.8% of petrol’s price and state taxes, 23.08%, according to an official data of June 1. On diesel, central taxes are over 37.24% while state taxes are about 14.64%. 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.

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 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)— control almost 90% of the domestic fuel retail market.