Fuel prices rise again, petrol costlier by ₹1.40/litre in a week
Fuel rates broke yet another record on Tuesday, with state-run oil marketing companies raising petrol and diesel prices for sixth time in eight days making petrol costlier by ₹1.40 per litre and diesel by ₹1.63 a litre since May 4.
Petrol now retails for ₹91.80 per litre in Delhi , the highest ever, and diesel, ₹82.36 a litre. Petrol prices have already crossed ₹100 to a litre in certain remote areas, such as Ganganagar (Rajasthan) and Anuppur (in Madhya Pradesh) where there is a transportation surcharge. Fuel prices also vary from place to place due to state-specific taxes, cess and other local levies.
To be sure, much of the retail price is taxes. For instance, in Delhi, on May 10, central taxes accounted for 36% of petrol’s price, and state taxes, 23%. 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 revenue hit on account of the pandemic.
State-owned oil companies raised the price of petrol by 27 paise per litre and diesel by 30 paise a litre on Tuesday even as their average cost of crude oil fell to ₹4,934.27 a barrel from ₹5,055.82 a barrel about a week ago. Benchmark Brent crude also dropped by 1.2% at $67.50 per barrel during the intraday trade on Tuesday.
If oil marketers are raising rates even as global crude prices fall, blame it on politics, two executives in two different oil marketing companies said. The companies have to recover their past losses from not raising fuel prices during the assembly elections in four states and one Union territory, the two executives added on condition of anonymity. Petrol and diesel rates did not see any upward movement for 66 days in a row from February 27. The Election Commission had announced assembly polls on February 26. Oil marketers are, on paper, free to set their own prices, but this is still tightly regulated by the Union government.
Interestingly, the price increase comes even as retail sales of fuel are declining across India, much of which is under some kind of lockdown, resulting in significant restrictions on movement. Hindustan Times reported on May 7 that fuel sales in urban areas have dropped as much as 50-60% and those in rural areas by 20-30%.
According to Indian Oil Corporation (IOC), petrol and diesel were selling at ₹98.12 per litre and ₹89.48 a litre in Mumbai on Tuesday, ₹91.92 per litre and ₹85.20 a litre in Kolkata, and ₹93.62 per litre and ₹87.25 a litre in Chennai.
Pump prices of petrol and diesel in India are aligned to their international benchmarks and often move in tandem.