Petrol and diesel rates hiked on Sunday, over 10% jump in 2 months

Auto fuel rates rallied on Sunday as state-run oil companies raised petrol prices by 35 paise and diesel by 18 paise a litre in the 34th hike in two months, making the two fuels costlier by over 10% since May 4, a day after results of five assembly polls were declared.

Retail rates of auto fuels moved almost in tandem with international oil prices since May 4 resulting in 10.07% ( 9.11 per litre) jump in petrol and 10.68% ( 8.63 a litre) in diesel prices, while benchmark Brent crude surged 10.58% in the two-month period at $76.17 a barrel on Friday close.

With the latest hike, petrol rates in Delhi and Kolkata have inched closer to the 100 a litre mark at 99.51 and 99.45 per litre respectively. New rates of diesel in Delhi and Kolkata are 89.36 per litre and 92.27 respectively.

While fuel rates of state-run Indian Oil Corporation (IOC) in Delhi are the benchmark for the entire country, retail prices of the two fuels differ from place to place because of variations in state taxes and local levies.

Petrol has, however, crossed the 100 mark in three metros — Mumbai, Chennai and Bangalore. The financial capital on Sunday priced petrol at 105.58 per litre and diesel at 96.91.

The highest fuel rates have been recorded in Rajasthan’s Ganganagar where pumps are selling petrol at 110.77 per litre and diesel at 102.60 a litre.

Petrol rates have crossed 100/litre mark in various cities across the country, particularly in states and UTs of Maharashtra, Rajasthan, Andhra Pradesh, Madhya Pradesh, Karnataka, Telangana, Odisha, Manipur, Jammu & Kashmir, Ladakh, Punjab, Bihar, Kerala, Tamil Nadu and West Bengal.

Some of the cities selling petrol for over 100 per litre are Mumbai, Ratnagiri, Parbhani, Aurangabad, Jaisalmer, Ganganagar, Banswara, Indore, Bhopal, Gwalior, Guntur, Kakinada, Chikmagalur, Shivamogga, Hyderabad, Leh, Imphal, Kalahandi, Sopore, Baramulla, Patna, Salem, Thiruvananthapuram, Mohali and Darjeeling.

Surging international oil rates and the domestic taxes are two key reasons for high rates of petrol and diesel in pumps. Domestic fuel retailers align pump prices of petrol and diesel with respective international benchmarks of the previous day, which often move in tandem with crude oil rates.

International oil prices rally continued on Friday after producers’ cartel – the Organisation of the Petroleum Exporting Countries and its allies, including Russia (together known as OPEC+) – on Thursday decided to restore less than expected supply even as global oil demand is growing.

Brent crude surged 1.6% at $75.84 a barrel on Thursday and further gained 0.44% in the next trading session to close at $76.17 on Friday, the highest since October 2018.

Domestic taxes are the other reason for high prices of auto fuels in the country. In Delhi, central levies account for 33.29% of petrol’s price and state taxes, 23.07%, according to an official data of July 1. On diesel, central taxes are over 35.66% while state taxes are about 14.62%. Through 2020, as global crude prices fell, the central government raised excise duty on the fuel to shore up its finances. States too followed suit — with revenues hit on account of the pandemic.

According to executives working in state-run oil marketing companies, pump prices are also high because companies were recovering their past revenue losses like the one suffered for 66 days since February 27 when rates were not raised because of assembly elections in four states and one Union territory.

The government deregulated the pricing of petrol on June 26, 2010 and diesel on October 19, 2014. Accordingly, state-run retailers are free to change pump prices every day. Public sector retailers such as Indian Oil Company (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) control almost 90% of the domestic fuel retail market.

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