Zero to 100 has taken around 5 days. In this case, it is the rise in petrol price in Mumbai – from nearly Rs 95 on February 13 to Rs 96 today, the inexorable rise of fossil fuel prices continues. Petrol has today hit a new high in India’s financial capital, and is just Rs 4 short of the Rs 100 mark. How long will it take to hit the century is anybody’s guess. That is, if the Centre and state government don’t cut excise duty on the fuel.
It has taken 41 days for the price of petrol to rise Rs 90.83 on January 7, 2021 to today’s price of Rs 96 – an increase of Rs 3.81 a litre. But the frequency of price hikes in most of that period was much slower. In the past 13 days, petrol has risen by Rs 2.80 a litre, with price hikes for the past eight straight days. See data sheet below.
If global crude oil prices stay on the ascent and there are resultant price hikes in India by oil marketing companies, it is likely that the Rs 100 a litre could be crossed rather soon. A snap poll on Autocar Professional’s Twitter handle revealed that 53% believe that could be by March 1, while 24% think that date could be March 15 and another 22.6% say March 31. Any which way it is wallet-busting news for the Indian motorist. In 11-and-a-half months, the price of petrol has catapulted by Rs 20.72 a litre and diesel by even more – Rs 21.79 a litre.
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 9.02 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 directly contributing to overall inflation. Not surprisingly, transporters – as well as millions of motorists – are worried.
It is understood that following a governing council meeting on February 13, the All-India Motor Transport Congress (AIMTC) has issued a 14-day ultimatum to the government, threatening to suspend transport services across the country.
Taxes make up for over 61% of retail petrol price and 56% 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. On February 12, Assam announced a price cut of Rs 5 per litre on petrol and fuel. Will other states follow suit?
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 $63.42 a barrel, up 245% 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?