By India Ashok
On Friday, petrol and diesel prices once again, went up. Fuel prices were reportedly raise by around 28 to 31 paise per litre across Delhi, Mumbai, Kolkata, and Chennai. For around three weeks before the Karnataka election, petrol and diesel prices remained unchanged. However, not long after Karnataka elected a new government, state-owned Indian Oil Corp (IOC), Hindustan Petroleum Corp (HPCL) and Bharat Petroleum Corp (BPCL), ended a 19-day hiatus to revive fuel prices.
The old practice of daily changing petrol and diesel price rates is once again in place now. NDTV reported that the newly changed prices are passed along to fuel stations at 6am everyday.
Here’s what happened?
So far, petrol and diesel prices have been hiked five consecutive times. However, before these consecutive hikes, for around three weeks, fuel prices were not raised. This extended period of no change in the prices has forced oil marketing firms (OMCs) to raise petrol prices by Rs 4.6 per litre, and diesel prices by Rs 3.8 per litre.
“OMCs have started increasing retail prices now, but the ask-rate remains high at Rs. 4-5/litre to earn normative margins. Our computation suggests that downstream OMCs are required to increase retail prices of diesel by a steep Rs. 3.5-4/litre and gasoline (petrol) by Rs4-4.55/litre in the coming weeks to earn normative gross marketing margins of Rs. 2.7/litre, assuming global price of diesel and gasoline and Rupee-US Dollar exchange rate remain stable hereon,” a report by the Kotak Institutional Equities stated, NDTV reported.
The most recent fuel price hike resulted in diesel prices going up to Rs 67.08 per litre in Delhian all-time high. Petrol prices in the capital were hiked to Rs 75.61 per litre. Meanwhile, in Mumbai, the price of petrol at Rs 83.45 per litre, is the highest in the country. Diesel prices in India’s financial capital were hiked to Rs 71.42 per litre, MoneyControl reported. As of Friday, petrol prices in Kolkata and Chennai were hiked to Rs 78.29 per litre and Rs 78.46 per litre respectively, while diesel prices were hiked to Rs 69.63 per litre and Rs 70.80 per litre.
Why you should care
According to experts, the recent drop in the rupee’s value and the increasing international crude oil prices could lead to further fuel hikes in India. For the first time since November 2014, crude oil prices went higher than $80 a barrel on May 17.
“The current hike has come in the wake of US sanctions that are expected to severely limit the exports from Iran, one of the biggest producers in the Middle East… For the Indian consumer short-term pain at the pump is going to stay… we do not expect a very steep hike in the prices in the medium term, the prices in the short term would remain volatile with a positive bias,” said Rahul Agarwal, director, Wealth Discovery/EZ Wealth, NDTV reported.
India Ashok is a senior copy editor at Qrius