Fuel rates stagnate before polls despite global price fluctuations

NEW DELHI: International oil prices (Brent crude) increased by over 9% from March 10 to April 10 to close at $71.73 per barrel. However, petrol prices increased by less than 1% during this period. This is not normal. With deregulation of petroleum prices, petrol and diesel prices move in tandem with international crude prices in India. This relationship does not hold whenever international oil prices are rising during elections, though.

An analysis of monthly increases in petrol prices and international crude prices between July 2017 and April 2018 shows that petrol prices rose by a significantly lower level than global crude prices four times. Three out of these were in the months before an assembly election. We have considered a onemonth period as starting on the 10th of every month and ending on the 10th of next month.

A similar stagnation in petrol prices could be seen during the April -May period in 2018 just before the Karnataka elections.

The Brent oil price increased by 11% in a one-month duration while price of petrol changed by less than 1%.

Even before the Gujarat elections that were held in December 2017, the international oil price rose 10 % in the October-november period followed by no increase in the subsequent month. In comparison, the petrol price increased by only 2% in October-november, which was reduced by 1% in the Novemberdecember period.

To be sure, a similar phenomenon was seen during the September-october 2018 period when international oil prices increased by 8% while the domestic price changed by just 2%.However, this could be explained since an excise duty cut of ₹2.5 per litre was announced by the government in the first week of October to control fuel prices. This analysis has used prices in Delhi to look at the movement in petrol prices.