Petrol costlier by Rs 11.14/litre and diesel by Rs 9.14/litre since May 4
Petrol became costlier by 35 paise a litre on Thursday after a two-day pause, and the diesel rate moved up by 15 paise again after the Monday’s price reduction of 16 paise, the first since April 15, even as international crude prices plunged by over 2%, anticipating ease in supply.
With the latest price hike, petrol rates have soared by ₹11.14 a litre and diesel by ₹9.14 since May 4, a day after the results of five assembly polls were declared.
Petrol is now priced at ₹101.54 per litre and diesel at ₹89.87 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 have already crossed ₹100 per litre in five metros – Delhi, Mumbai, Chennai, Kolkata and Bengaluru.
The cost of one litre of petrol in Mumbai is now ₹107.54 a litre and diesel, ₹97.45. The highest fuel rates have been recorded in Rajasthan’s Ganganagar where pumps are selling petrol at ₹112.90 per litre and diesel at ₹103.15 a litre.
Surging international oil rates and exorbitant domestic tax structure are two key reasons for high rates of petrol and diesel in Indian cities.
International oil prices showed extreme volatility since Monday last week when Brent crude had jumped to $77.16 a barrel, its highest since October 2018. However, the recent compromise between two factions of producers’ cartel — the Organisation of the Petroleum Exporting Countries and its allies, including Russia (together known as OPEC+) – over supplies pulled down crude prices by over 2%.
While Brent crude fell 2.26% to $74.76 a barrel on Wednesday, the US West Texas Intermediate (WTI) declined 2.82%, at $73.13. The international oil market softened further on Thursday as Brent shed 0.79% at $74.17 a barrel in early intra-day trade.
While international oil prices impact pump rates of auto fuels because India imports more than 80% crude it processes, 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 an 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 ₹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, West Bengal, Chhattisgarh and Nagaland.
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, Darjeeling, Dantewada and Kohima.
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.