Elections over, petrol and diesel prices start seeing daily hike

The writing was on the wall and motorists in India were bracing for the price rise in petrol and diesel. They have not been disappointed. Two days after the results of the elections in four States – West Bengal, Kerala, Assam and Tamil Nadu – and the Union territory of Pondicherry were declared, oil marketing companies have hiked prices of the two fossil fuels. From end-March through to early May, prices were frozen, much to the relief of motorists.

Today is the second straight day of price increases, with petrol becoming costlier by 17 paise and diesel by 21 paise in Mumbai today. In Mumbai, petrol now costs Rs 97.12 a litre, just Rs 2.88 shy of the Rs 100-a-litre-mark, and tanking up on diesel will involve forking out Rs 88.19 a litre.

Today’s petrol price in Mumbai is just 45 paise short of the highest level the fuel had scaled – Rs 97.57 a litre on February 28, 2021.

In the past 13 months, since the start of FY2020, when BS VI kicked in, petrol and diesel prices have jumped massively. The price data table below reveals just how much more motorists in Mumbai, Delhi, Chennai and Kolkata are paying to go the same distance.

FY2021 on April 1, 2020, is today down to Rs 8.93 a litre, indicating the speedier price rise in diesel, which is the fuel used by scores of commercial vehicles crisscrossing the country and transporting essential goods and at present life-saving oxygen cylinders.

Taxes make up for over 61% of retail petrol price and 56% of diesel. The retail price of the two fuels is made up of three components – base price that reflects the cost of international oil, central excise duty and state taxes. Both Central and State governments rely heavily on collections from taxes on these products for meeting their developmental and welfare priorities.  

Global crude prices on the upswing
The rise of petrol and diesel prices is a direct impact of the marked increase in global crude oil prices, which in turn is a result of the key economies like the USA swinging back into work mode after the impact of the pandemic.

Given that Brent crude oil is trading at US$ 69.39 a barrel today, do not expect fuel prices to come down any time soon. Today’s Brent crude oil price is a 277% increase over the $18.38 a barrel price on April 1, 2020 when Covid-19 was peaking and transport and shipping operations worldwide were either in lockdown mode or minimal. However, the hapless Indian motorist never benefited from the record low prices of global crude oil either.