Petrol at ₹100/ litre in Delhi, hits century in all metros
Petrol prices crossed ₹100 per litre in Delhi and Kolkata on Wednesday after fuel retailers raised prices by 35 paise per litre even as international crude oil prices slumped on Tuesday following an inconclusive meeting of the producers’ cartel -- the Organisation of the Petroleum Exporting Countries and its allies, including Russia (together known as OPEC+) -- over supply cuts.
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. Pump rates of auto fuels rose in India on Wednesday even as international oil prices fell sharply the previous day.
An impasse in the meeting of OPEC+ saw profit booking on Tuesday that led to a sharp 3.4% decline in Brent crude to $74.53 per barrel after it hit the session’s peak at $77.84, the highest since October 2018. The US West Texas Intermediate (WTI) crude also fell 2.4% to $73.37 that day, after hitting $76.98 during the intraday trade, its highest since November 2014.
The international oil price rally resumed on Wednesday. Brent opened weak on Wednesday, but gained $1.40, or 1.88%, to $75.93 a barrel during intraday trades.
The Wednesday revision of India’s domestic fuel rates is the 36th hike in last 65 days that has made petrol costlier by ₹9.81 per litre and diesel by ₹8.8 a litre since May 4, a day after results of five assembly polls were declared. Petrol is now priced at ₹100.21 per litre and diesel at ₹89.59 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, local levies, and transport surcharges.
With the latest hike, petrol rates in all major metros have crossed ₹100 per litre. In Kolkata, petrol is priced at ₹100.23 per litre and diesel at ₹92.50 a litre. The cost of one litre of petrol in financial capital Mumbai is now ₹106.25 and diesel, ₹97.09. High fuel prices have an inflationary effect on the economy. Fuel prices have a weightage of 6.8% (fuel and light) in the consumer price index of CPI, a measure of retail inflation. The latest CPI number, for May, is 6.3%, above the Reserve bank of India’s comfort level of 6%.
The highest fuel rates have been recorded in Rajasthan’s Ganganagar where pumps are selling petrol at ₹111.50 per litre and diesel at ₹102.78 a litre.
Surging international oil rates and skewed domestic tax structure are two key reasons for high rates of petrol and diesel in pumps.
In Delhi, central levies account for 33.29% of petrol’s price and state taxes, 23.07%, according to an official data of July 1. On diesel, central taxes account for around 35.66% while state taxes, 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 Covid-19 pandemic.
The unrelenting upward movement of fuel rates since May 4 has already seen petrol prices crossing the ₹100 mark in various cities across the country, particularly in states and Union territories (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 falling to $65.11 on May 20, the lowest over the past 46 days, petrol and diesel rates went up on May 21 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 are 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 UT.
During the 66-day pause on price hikes, state-run retailers 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.