Fuel rates jump over ₹8 a litre in 55 days
Petrol and diesel in Delhi are now sold at a record ₹98.46 per litre and ₹88.90 a litre, respectively.
The rally of petrol and diesel rates continued unabated on Sunday by 35 paise a litre and 25 paise respectively, the 31st hike in 55 days, which made petrol costlier by ₹8.06 per litre and diesel by ₹8.17 since May 4, a day after results of five assembly polls were declared.
Petrol and diesel in Delhi are now sold at a record ₹98.46 per litre and ₹88.90 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.
Both petrol and diesel rates have crossed the ₹100 mark in Rajasthan’s Ganganagar, where petrol is sold at ₹109.67 per litre and diesel at ₹102.12 a litre on Sunday.
The financial capital has the highest fuel rates among five metros where petrol is currently sold at ₹104.56 per litre and diesel at ₹96.42 a litre.
The latest hike leads to the highest jump in fuel rates in last two days as state-run oil marketing companies had raised pump prices of petrol and diesel by 35 paise a litre on Saturday that saw petrol breaching ₹100 mark in several cities of four more states – Punjab, Bihar, Kerala and Tamil Nadu.
The unidirectional upward movement Since May 4 saw petrol already crossing ₹100 mark in various cities across the country, particularly in Maharashtra, Rajasthan, Andhra Pradesh, Madhya Pradesh, Karnataka, Telangana, Odisha, Manipur, Jammu & Kashmir and Ladakh.
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 and Mohali.
Surging international oil rates and exorbitant domestic tax structure are two key reasons for high rates of petrol and diesel in pumps.
International oil prices soared on the last trading day (Friday), the highest since October 2018 on expectations of demand growth, continued oil squeeze by producers’ cartel and geopolitical reasons. Brent crude on Friday surged 0.82% to $76.18 a barrel, while US West Texas Intermediate (WTI) jumped 1% to 74.05. Last week, both benchmarks closed at record levels since October 2018.
Domestic fuel retailers align pump prices of petrol and diesel with respective international benchmarks of the previous day, which often move in tandem with crude oil rates.
Pump prices of fuels are also high because of taxes. In Delhi, central levies account for 34.03% of petrol’s price and state taxes, 23.08%, according to official data of June 16. On diesel, central taxes are over 36.38% while state taxes are about 14.63%. 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.
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 the 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)— control almost 90% of the domestic fuel retail market.