Petrol prices crossed ₹100 mark per litre in several cities on Sunday after its price was raised by 24 paise per litre along with 27 paise a litre for Diesel. This was the ninth hike in 13 days, making petrol costlier by ₹2.18 and diesel by ₹2.49 a litre in less than two weeks since May 4.
The hike made petrol price cross ₹100 a litre mark in several cities in Rajasthan, Maharashtra and Madhya Pradesh including Ratnagiri, Parbhani, Aurangabad, Indore, Bhopal, Gwalior, Jaisalmer, Ganganagar and Banswara.
Among major metros, Mumbai has the highest fuel rates. While petrol is priced at ₹98.88 per litre in the financial capital of India on Sunday, diesel is priced at ₹90.40 a litre. Retail prices of the two fuels differ from place to place because of variations in state taxes and local levies.
There are two key reasons for higher petrol and diesel rates – high taxes on auto fuels and a spike in international oil prices. To be sure, much of the retail prices are made up of the tax component. For instance, in Delhi, on May 16, central taxes accounted for 35.5% of petrol’s price, and the state taxes accounted for 23%. On diesel, Central levies are over 38.2% while state taxes are about 14.6%. Through 2020, as global crude prices fell due to the economic impact of Covid-19, 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.
International oil prices and rupee-dollar exchange rate, too, impact domestic pump prices as India imports over 80% crude oil it processes and pays in dollars. Benchmark Brent crude closed the week on Friday at $68.71 a barrel, with a gain of 2.48%. Retail prices of petrol and diesel in India are aligned with their international rates of the previous day.
According to executives working in state-run oil marketing companies, pump prices are also high because companies are recovering their past revenue losses. State-run oil marketing companies had suffered when they didn’t raise prices for 66 days since February 27 because of assembly elections in four states and one Union territory. The pump price rally in India started a day after the poll results on May 4.
During the 66-day pause on rate hike, state-run retailers had reduced petrol and diesel rates by 77 paise and 74 paise a litre, respectively in four small cuts. But, the entire gains to the consumers were quickly reversed in the first four consecutive rounds of rate hikes starting from May 4.
HT wrote on April 28 that fuel rates would move north after polls and their pump prices would start seeing small increments as state-run fuel retailers had been losing about ₹3 a litre on sale of the fuel because of higher international oil rates and depreciation of rupee against the dollar.
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.