NEW DELHI: On Monday, diesel became 70 paise a litre more expensive after state-run fuel merchants raised their rates by another 25 paise a litre, the fuel’s third price hike in the previous four days as international crude oil prices rise toward $80 a barrel due to rising demand and supply concerns.
However, since September 5, the price of petrol at the pump has remained unchanged at 101.19 a litre. Diesel prices in Delhi were 89.32 per litre on Monday, after falling to 88.62 per litre three weeks ago after reaching a high of 89.87 per litre in mid-July.
Retail prices of petrol and diesel are under pressure due to rising worldwide oil costs, and automobile fuel rates may continue to increase, according to two people working for different oil businesses who spoke on the condition of anonymity.
Benchmark Brent crude continued to rise in intraday trade on Monday, rising 1.83 percent to $79.52 per barrel. From $72.22 per barrel three weeks ago, it has increased by more than 10%. Fuel merchants are expected to begin hiking fuel prices soon, according to a report published by HT last week.
Fuel merchants began lowering prices as international oil prices fell below $70 per barrel in mid-August. After climbing to an all-time high of 89.87 a litre in mid-July and remaining at that level for the next 34 days, diesel prices were first decreased by 20 paise per litre on August 18. On August 22, petrol prices were dropped by 20 paise per litre for the first time in 36 days after reaching a high of 101.84 per litre in Delhi.
Following that, a series of modest price decreases reduced the price of petrol and diesel by 65 pence per litre and 1.25 pence per litre, respectively, until their pump rates were locked on September 5.
According to the sources cited above, international crude oil prices surged due to lower US oil output following Hurricane Ida’s devastation of the Gulf of Mexico, as well as strong demand fueled by confidence about global economic growth.
“Companies were holding prices and expecting some tax relief from the government in the form of GST (Goods and Services Tax) relief, but the proposal to include petroleum products in GST was rejected in the GST Council meeting on September 17, forcing companies to consider raising fuel rates,” according to one of the individuals mentioned above.
International oil prices, which are typically fluctuating, have a direct impact on petrol and diesel prices at the pump in India. Auto gasoline prices are also astronomically expensive due to heavy loads of federal and state taxes.
As global crude prices plummeted (below $20 a barrel in April last year), the federal government increased the gasoline excise levy to shore up its budget through 2020. States followed suit as a result of the Covid-19 pandemic’s financial impact. As a result, combined central and state levies account for more than half of the retail price of gasoline and diesel.
In 2020-21, the petroleum sector contributed 371,726 crores in Central excise income and 202,937 crores in state levies or value-added tax, according to official figures (VAT).
As worldwide crude prices continue to rise and the rupee depreciates against the dollar, another increase in motor fuel prices is predicted. India imports about 80% of its crude oil, which it processes and pays for in dollars. In Delhi, central taxes account for more than 32.5 percent of the price of gasoline, while state taxes (VAT) account for 23.07 percent. The Central Excise is over 35.8% on diesel, while the VAT is over 14.6 percent.