After Lockdown, Petrol Prices are going up

After Lockdown, Petrol Prices are going up

Petrol prices are increasing daily in India. Prices are rising at 06:00 a.m. every day. This makes sure that even a minute’s difference in global oil prices can be transmitted to fuel users and dealers.

Why Petrol price so high in India ?

The price of fuel involves excise duty, value-added tax (VAT), and dealer commission. VAT varies from state to state. Later adding excise duty, dealer commission, and VAT, the retail selling price of petrol gets nearly multiplied.

Various factors affect the price of fuel. These include rupee over US dollar exchange rate, cost of crude oil, global cues, trade for fuel, and so on. When international crude oil prices grow, prices in India move higher

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Petrol and diesel prices had firmly raised in India since June 7th’20, when oil companies resumed the daily price correction mechanism after a gap of 83 days amid the lockdowns.

Internationally, there is a recovery in petrol and diesel prices. But it seems that there is more movement of commercial vehicles, like trucks, so the increase in demand for diesel is more than that for petrol.

The price of auto fuels in India is benchmarked to international prices. These results in domestic prices are going up or down, irrespective of whether the companies make the same gains or not,” a company official said.

What Chairman of Indian Oil Corporation, Mr. Sanjiv Singh says on this ?

“We follow international prices. We follow the Arab Gulf rates to work out the domestic prices which are required to be maintained. There are formula and guideline, which is to be followed, and we understand the trade parity concept, which considers 80 percent import and 20 percent export”.

Responding to concerns regarding the steep lift in petrol and diesel prices after the lockdowns ended, Singh said: “The starting point is the typical Arab FOB (free on board) price. They have been at reasonable margin levels for petrol and diesel, Now we notice the demand again pick up, so we see crude oil, petrol and diesel prices in the international market also go up,” he added.

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Global Glimpse

Pakistan raised petrol and diesel prices to over Rs 100 per liter each, with a massive retail fuel price hike of up to Rs 26 per liter on Friday, according to media reports from India’s neighboring country.

The average price of gasoline around the world is 72.96 Indian Rupee per liter. However, there is a substantial variation in these prices among countries. As a general practice, richer countries have higher rates while poorer countries and the countries that produce and export oil have significantly lower prices.

One unusual exception is the U.S., which is an economically advanced country but has low gas prices. The disputes in rates across countries are due to the various taxes and subsidies for Petrol.

All countries have access to the same petroleum prices of international markets but then decide to impose various taxes. In the end, the retail price of Petrol is different.

 

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