Petrol-Diesel Price: Crude prices are low and taxes too, yet why are petrol prices not decreasing? – crude and excise down than why petrol and diesel prices are not coming down
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oil game
On paper, the price of petrol in the country was deregulated 13 years back in July 2010. Similarly, diesel was also deregulated in October 2014. The government has said this in Parliament that oil marketing companies decide the price of petrol and diesel in the country. But if you go to the petrol pump, it does not seem so. For example, in October 2014, when the price of crude was $86.8 per barrel, the average price of petrol in the country was Rs 67 per litre. After 15 months, in January 2016, when the price of crude came down to $28.1, petrol was around Rs 60 a litre.
what is the price now
Later, when the price of crude increased to $ 50 per barrel, the price of petrol increased to Rs 70. But in April 2020, when crude came down to $ 19.9, there was not much change in the price of petrol in the country. After one year, petrol reached $65 per barrel, then in March 2021, petrol went to Rs 90. Crude oil prices have been falling continuously since June last year, but the average price of petrol in the country remains at Rs 97. Petrol cost Rs 96.72 and diesel Rs 89.62 per liter in Delhi on Tuesday.
when was the last change
Crude prices have fallen by 35 per cent in the last one year. Also, the central excise has come down by Rs 13 as compared to the September 2021 peak. Still, there has been no change in the retail price of petrol in the country. At one point in March last year, the price of crude oil reached $139 a barrel, its highest level since 2008, after the war between Russia and Ukraine. Right now the price of crude is around $78 per barrel. Oil marketing companies in the country last changed the price of petrol and diesel in April last year. In May, the Center reduced excise duty on petrol and diesel. Since then there has been no change in the price of petrol and diesel in the country.
America’s condition
In America, the market decides the price of oil. The price of petrol and diesel varies according to the price of crude oil. For example, in October 2014, when crude was priced at $2 a gallon, petrol cost $2.4 and diesel $2.5 a gallon. One gallon is equal to 3.78541 liters. In February 2016, when crude came down to $0.7 per gallon, the price of petrol and diesel came down to around $1 per gallon. Similarly, in June 2022, when the price of crude reached $ 2.7, the price of petrol reached $ 4.1 and the price of diesel reached $ 4.4. But since then the price of petrol and diesel in the country has come down significantly. The question is why retail prices in the US move according to crude? The reason for this is that crude has the highest importance in the price of fuel. According to the American Petroleum Institute, the weightage of crude in the price of petrol is 61%. Apart from this, the price of petrol includes 14% refining cost, 11% distribution and marketing cost and 14% federal and state tax.
India’s position
The situation in India is different from America. Tax has the biggest share in the price of petrol and diesel here. Whenever there is a fall in crude oil, the central government increases the excise. For example, in October 2014, when the crude price was $86.8, the central excise was Rs 9.5 per litre. In January 2016, when the price of crude fell to $ 28.1 per barrel, the central excise increased to $ 19.7 per liter. In April 2020, when the price of crude fell to $19.9 per barrel due to Corona, the central tax increased to Rs 23 per litre. After a month it increased to Rs.33. In May 2022, when the price of crude reached $ 100 per barrel, the government reduced the excise on petrol to Rs 19.9. Despite this, it is about Rs 10 more than the October 2014 level.
Now OMC is making profit
The price of crude oil has also come down much below the peak and the central tax has also reduced as compared to 2021 but the price of petrol and diesel has not changed since a year. The reason for this is that the oil marketing companies have increased the price for the dealers. In September 2021, when the price of crude was $ 73.1 per barrel, the central government was charging Rs 32.9 tax per liter of petrol, while oil companies were selling petrol to dealers at Rs 41.6. A month later, when the price of crude reached $80 a barrel, the central excise was reduced to Rs 27.9 while the oil companies raised the base price to Rs 48.2 per litre. In March 2022, when the price of crude crossed $100, the central government reduced the excise to Rs 19.9, but the oil companies were charging a base price of Rs 57. Since then it has remained at the same level. India was getting cheaper oil than Russia, but the consumers are not getting the benefit of it.
Is the rupee responsible
India imports most of the crude. Therefore, the exchange rate also has an impact on the prices of petrol and diesel. But the price of petrol and diesel has increased more rapidly than the fall in the value of rupee. In October 2014, the average exchange rate was Rs 61.3 per dollar while the average crude price was $86.8 per barrel. According to this, the price of crude comes to Rs 5,325 per barrel i.e. Rs 33 per litre. Now the dollar price has gone above Rs 82 but crude is at $74.5 per barrel. Accordingly, the price of crude comes to Rs.38 per litre. In this way, in rupee terms, the price of crude has increased by 14.9 percent. But during this period the price of petrol has gone up by 43.8 per cent and diesel has become costlier by 61.2 per cent.
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