Udayavni Special

Why petrol and diesel prices in India keep on rising?

Team Udayavani, Jul 7, 2020, 2:59 PM IST

Since June 7, fuel prices went up for a consecutive 22 days. In Delhi, the rise in the petrol price was hiked by Rs. 9.12 per litre between June 7 and June 26 while diesel is at its speed with a hike of Rs. 11.01 per litre

The fuel prices are now at a four-and-a-half month high in India even as crude oil rates have slumped below the $40 a barrel mark.

Why are the fuel prices rising

Well, first thing Crude oil isn’t the end product. It is  an intermediary that requires additional refining. One needs to pump crude through a processing facility

Also, the price of the end product can vary depending on the complexity involved in processing crude into its desirable constituents.  Diesel is heavier, less volatile, and easier to refine compared to petrol and that is why diesel tends to be slightly cheaper than petrol

Also, government doesn’t take much tax on it because of its high usages by trucks, industries, farmlands, generators etc, even personal vehicle.But, On June 24th , diesel was sold at a higher price than petrol.

Due to lockdown, there was a dive in 60% in petrol consumption and 55% in Diesel usage. But businesses cannot be stopped suddenly, the companies still have to ship the oil, continue with the refining process, pay salaries to the employees even though there aren’t enough consumers buying fuel.

As there was less consumption of crude oil during the lockdown, government increased excise on fuel and diesel. Excise is paid by the producers and sellers and when the government increases the excise, the companies pass on to the consumer.

Also, Oil Marketing Companies saw this coming and stopped revising prices after March 16th. As they could see that crude oil prices were trending downwards they wanted to keep their margins intact. OMC’s started revising prices again on June 6.

On the other hand, state governments also have chosen to increase taxes on petrol and diesel in order to increase revenue.

After the month of  March, retail fuel prices remained flat since falling crude rates were negated by hiked excise duties.

Now as the benchmark Brent rates have sprung back, state-run OMCs have reportedly suffered losses of about Rs. 8 per liter of petrol/diesel they sell and they have started hiking prices to retain profits.

Also, fuel is a critical input for any economy and rise in its prices usually mean an increase in prices for a host of other goods and services

Top News

India’s COVID-19 fight takes a hit as over 6 lakh warriors go on strike

SSLC exam results to be announced on Aug 10: Edu Min

Rhea Chakraborty appears before ED in money laundering case

Mumbai: Bihar IPS officer released from quarantine

Five killed, several trapped in landslide in Idukki district

New Education Policy focusses on how to think: PM

K’taka link to Ram Mandir Bhoomi Pujan: Idol gifted to PM Modi sculpted by B’luru artisan

Related Articles More

Covid-19: What are some of the most eerie and spine-chilling conspiracy theories around the pandemic

What is the new Tick-borne virus that has infected more than 60 people in China?

Mahinda Rajapaksa: South Asia’s longest serving ruler returns to power after a gap

What is the #ZimbabweanLivesMatter campaign that is gaining momentum worldwide?

Parivar Pehchan Patra: What is the new family ID-card launched by Haryana Government?


Horticulture in 75 cents land | Success Story of Padmanabha | Udayavani

Shankar Suvarna | Interview with successful Dairy Farmer | Agriculture

Rangayya Naik | How to Nurture a Child | Udayavani

B. S. Yediyurappa sense of duty in hospital as well; Important Files Verification | Covid Positive

MGM college’s Ravindra Mantapa Opening Ceremony | Udayavani

Latest Additions

Covid-19: What are some of the most eerie and spine-chilling conspiracy theories around the pandemic

Ayushmann Khurrana, Vaani Kapoor roped in for Abhishek Kapoor’s next

India’s COVID-19 fight takes a hit as over 6 lakh warriors go on strike

US updates global travel advisory amid COVID-19; India remains on ‘don’t travel’ list

BCCI claims “in principle” govt approval for IPL in UAE; teams begin quarantining players

Thanks for visiting Udayavani

You seem to have an Ad Blocker on.
To continue reading, please turn it off or whitelist Udayavani.