Petrol, diesel prices soar after ninth hike in 13 days

Petrol became costlier by 24 paise per litre and diesel by 27 paise a litre on Sunday as state-run retailers raised rates for the ninth time in 13 days, making the fuels costlier by ₹2.18 and ₹2.49 a litre, respectively, since May 4.

Petrol prices crossed the ₹100 mark in several cities, particularly in Rajasthan, Maharashtra and Madhya Pradesh on Sunday. Key cities to sell petrol over ₹100 per litre include Ratnagiri, Parbhari, Aurangabad, Indore, Bhopal, Gwalior, Jaisalmer, Ganganagar and Banswara.

Among major metros, Mumbai has the highest fuel rates. While petrol is sold at ₹98.88 per litre in the financial capital of India on Sunday, diesel is sold at ₹90.40 a litre. Even as fuel rates 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.

There are two key reasons for higher petrol and diesel rates – taxes on auto fuels and a spike in international oil prices. To be sure, much of the retail price is taxes. For instance, in Delhi, on May 16, central taxes accounted for 35.5% of petrol’s price, and state taxes, 23%. On diesel, central levies are over 38.2% while state taxes are about 14.6%. Through 2020, as global crude prices fell, the central government raised excise duty on fuel to shore up its finances. States too followed suit — with revenue hit on account of the pandemic.

International oil prices and the rupee-dollar exchange rate impact domestic pump prices as India imports over 80% crude oil it processes and pays in dollar. Benchmark Brent crude closed the week on Friday at $68.71 a barrel, with a gain of 2.48%. Fuel retail prices in India are aligned with their international rates of previous day. According to executives of state-run oil marketing companies, pump prices are also high because companies are recovering their past revenue losses. State-run oil marketing companies had incurred revenue losses for keeping any upward price movement of the two politically sensitive fuels under pause 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 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 doses. But, the entire gains to the consumers were 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 the 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) — control almost 90% of the domestic fuel retail market.