At Rs 91.32 a litre, petrol just 2 paise shy of hitting all-time high in India

It’s Makar Sankranti today. In India,  the day marks the onset of a new harvest season and the end of the winter season. But the Indian motorists will have little to harvest because he/she continues to be harangued by the incessant price rise in fossil fuels. The first price rises in CY2021 happened on January 6-7, followed by five days of ‘rest’ and two days of increase on January 13-14.

The price of petrol today – January 14 – has hit Rs 91.32 a litre in Mumbai, which makes it just 2 paise short of the all-time high of Rs 91.34 recorded on October 4, 2018. On January 7, petrol price in India’s financial capital was Rs 90.83, which means the fuel has seen an increase of 49 paise over the past week. Any guesses when the all-time high for petrol prices will be breached? Clearly, when the next round of price increase happens. It could even be tomorrow.

Diesel, the ‘common man’s fuel’, has not been spared either. From Rs 81.07 a litre on January 7 in Mumbai, diesel today costs Rs 81.60 a litre, having risen by 53 paise in the past week. The price differential between the two fuels is now Rs 9.72 a litre.  

For most of December 2020, there were scarcely any price hikes in fossil fuels and there was a 27-day relief for motorists as oil marketing companies kept petrol and diesel prices unchanged. There has been a speedy rise in crude oil prices and Brent crude is currently trading at S57.19 a barrel today, up from $54 per barrel on January 7. At end-November 2020, a barrel of crude was S44.48, more than twice the two-decade low when crude oil prices had dived to under $20 a barrel in April 2020. However, the Indian motorist never got the benefit of lower prices even when global crude oil prices had plunged. Now, with global oil prices firming due , expect a regular rise

Like the stock markets, crude oil prices react to a number of variable including supply and demand, economic news and crises like Covid-19. As countries lift lockdowns and return to manufacturing operations, the need for transport operations, particularly as nations race to deliver critical Covid-19 vaccine, the demand for crude oil has risen and resultantly the price.

Shift to EVs?
The continued rise in fossil fuel prices though may be 'good news' for purveyors of electric mobility. The government and a number of Indian states are aggressively pushing for a shift to electric vehicles (EVs), which promise zero tailpipe emission and reduced air pollution.

The Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles scheme has targeted an ambitious target of achieving 30% EV penetration across India by 2030. While adoption of electric mobility in the passenger vehicle segment is abysmal, demand for electric two- and three-wheelers is on the rise.

EV OEMs are particularly keen to ride the wave of demand for electric three-wheelers for both personal and last-mile cargo transportation. Mahindra Electric, for instance, has launched the Trezo Zor cargo three-wheeler. Priced at Rs 273,000 (ex-showroom Delhi, net of FAME 2 and state subsidies), the company claims the TreoZor offers higher savings of over Rs 60,000 a year compared to existing diesel cargo three-wheelers, which is a result of its maintenance cost of just 40 paise per kilometre.