The petrol prices have risen by about 5 paise country-wide. Prices have risen for the 22nd time in the past 23 days (There was no hike on Sunday). Diesel prices too are hovering close to the Rs 80 mark in many cities.
The daily price mechanism resumed on June 7 after certain relaxations in lockdown were announced. The government did not increase the price for 83 days during the nation-wide lockdown to contain the spread of Covid-19.
Petrol prices as of June 29 (per litre)
- Delhi: Rs 80.47
- Mumbai: Rs 87.17
- Chennai: Rs 83.08
- Kolkata: Rs 81.61
Diesel prices as of June 29 (per litre)
- Delhi: Rs 80.57
- Mumbai: Rs 78.81
- Chennai: Rs 77.71
- Kolkata: Rs 75.62
Though India, being the third largest oil consumer in the world, benefited immensely from the lower crude price in the past few months , not much of it got passed on to the motorist.
It may be recollected that on May 6, the Centre had sharply increased excise duty on the fuels – Rs 10 per litre on petrol and Rs 13 per litre on diesel – aimed at generating an estimated Rs 1.6 lakh crore of additional revenue. It is not just Centre but even several States increased VAT charges on the automotive fuel. Oil marketing companies (OMC)s are also trying to improve their margins by keeping the retail price high to make up for the losses during the lockdown. All the three factors have contributed to the incremental hike in fuel prices on almost a daily basis leading to a significant increase cumulatively.
Fuel consumption jumps in May
According to the latest PPAC data, Petrol consumption in May recorded a growth of 81.8% as compared to April 2020. HSD (Diesel) consumption during May recorded a growth of about 69% over April 2020. This is due to increase in mobility and opening up of lockdown related restrictions.
Crude imports decreased by 22.6% and 19.2% during May 2020 and April - May 2020 respectively year on year as compared to the corresponding period of the previous year, as per PPAC.
The price of Brent Crude averaged $28.98/bbl during May, 2020 as against $18.55/bbl during April 2020. The Indian basket crude price averaged $30.60/bbl during May 2020 as against $19.90/bbl during April 2020.
Tracking crude trends
The retail prices are based on the average fuel price in the international market in the past 14 days. As per an analysis by CARE Ratings, the Brent crude prices declined by 12.7% year on year to US $61 per barrel during FY2020. This was due to the US-China trade war which affected the global economic growth and subdued oil demand. It was despite production cuts undertaken by OPEC groups. In March 2020, the crude oil prices plunged by 42.5% month on month to US $32 per barrel and fell to its lowest levels in April as the severe spread of coronavirus affected demand and led to a storage crisis. The prices improved on the back of moderate pick-up in demand backed by opening up of economic activities and supply cuts by OPEC and its allies.