Petrol and diesel price rise continues unabated

February 13 Update: Petrol and diesel prices have been hiked for the fifth consecutive day this week. Today's prices for four metro cities are as under:

The seemingly inexorable rise in the prices of petrol and diesel continues unabated. For the fourth time this week, prices have been hiked. With today’s (February 12) increase, the price of a litre of petrol in Mumbai is Rs 94.64 – Rs 5.36 short of the Rs 100 mark. If there is no government intervention soon to cut taxes, that figure could likely be scaled in a little over a month from now. And diesel, once billed as the ‘common man’s fuel, today costs Rs 85.32 in Mumbai.

Check out the data table above and you can see how much more motorists in Mumbai, Delhi, Chennai and Kolkata are paying more for the two fuels in a span of 36 days.

Given that the price of petrol in Mumbai was Rs 75.28 a litre on April 1, 2020 to today’s Rs 94.64, it means the cost of this fuel has risen by Rs 19.36 a litre in 10 months – a 26% price increase. For diesel, the price rise is even steeper – from Rs 65.19 a litre on April 1, 2020 to today’s Rs 85.32 in Mumbai, the price increase is Rs 20.13 – a 31% price increase.

The price differential between the two fuels, which was Rs 10.09 a litre at the start of the fiscal year FY2021 on April 1, 2020, is today down to Rs 9.32 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.  

More money for the same distance
These wallet-busting fuel prices are hitting the Indian motorist – on two-, four and more wheels – very hard. For instance, the owner of a fuel-sipping commuter motorcycle like the Hero Splendor, which has an 11-litre tank, would have paid Rs 828 to tank up on April 1, 2020 in Mumbai. Today, he pays Rs 1,041.04 – which is Rs 213.04 more – to go the same distance.

When it comes to cars, a Mumbai-based owner of a petrol-engined Maruti Wagon R which has a 35-litre fuel tank, will today pay Rs 3,312.40 to tank up compared to Rs 2,634.80 on April 1, 2020 – a sizeable difference of Rs 677.60. Meanwhile, to tank up his/her Hyundai Creta Diesel, which has a 50-litre fuel tank, the user will have to fork out Rs 4,266 today in Mumbai, compared to Rs 3,259.50 barely ten months ago on April 1, 2020 – a marked difference of Rs 1,006.50.

In the case of commercial vehicles, the unabated price increase for diesel would be hitting their profitability hard. Coming out of the Covid-induced downturn and lack of business, owners of medium and heavy commercial vehicles (M&HCVs) or even small CVs will be compelled to rejig their business models. For instance, a 37-tonner Tata truck like the LPT 3718 has a 400-litre tank. In April 2020, a full tank of diesel would have cost the owner Rs 26,076 in Mumbai. Ten months later, he has to pay Rs 34,128 for the same quantity of diesel – Rs 8,052 more – each time the truck is tanked up, which is often considering the amount of time most trucks are plying.

Transporters across the country, which have felt the heat of the Covid-19-induced slowdown in demand over the past eight-odd months and seeing their CV fleets idle, are understandably riled. The All India Motor Transport Congress (AIMTC), which represents around 7.5 million truckers and transporters, 4 million bus operators, 160,000 goods transport companies and 2,500 taluka district and State-level federations and transport associations,  has called for an emergency meeting to debate the issue and urge the government to reduce fuel prices.

Don't expect any price cuts soon
Taxes make up for over 61% of retail petrol price and 56% diesel. As per a PTI report, oil minister Dharmendra Pradhan has ruled out any cut in the excise duty rate for petrol and diesel. "There is no such proposal at present," he said in the Rajya Sabha when asked if the government was looking at cutting taxes to cool off prices.

Replying to questions on rising fuel prices, Pradhan said retail pump rates are governed by international prices as India is 85 per cent dependent on imports for meeting its need. "When the international price of crude oil is higher, we have to increase the prices and when the international price is lower, we have to decrease the prices here too. This is a market mechanism which is followed by oil marketing companies. We have given the freedom to them," he said during Question Hour.

The retail price, he said, 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, he said.

"They need some resources... (and) this (taxing petrol and diesel) has been a proven and substantial route by all the governments, whether the state governments or the central government," he said.

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

Today’s Brent crude oil price of US $60.80 a barrel, up nearly 200% than the $18.38 a barrel 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. Will there be a price cut soon? Not likely.