Fuel prices rise over ₹4/litre since resumption of daily revision

Fuel prices recorded eighth consecutive hike on Sunday, taking the total increase since the resumption of the dynamic price revision system to more than ₹4 per litre.

In the national capital, petrol price rose by 62 paise on Sunday to ₹75.78 per litre, and that of diesel by 64 paise to ₹74.03 per litre.

Since the dynamic price revision resumed on June 7, prices of petrol and diesel have increased by ₹4.52 and ₹4.64 per litre respectively.

Fuel prices in the other metro cities have also increased on similar lines since the oil marketing companies (OMC) resumed the dynamic pricing system for daily revision of fuel prices after over 83 days of break during the nationwide lockdown.

In Mumbai, Chennai and Kolkata, petrol was priced at ₹82.70, ₹79.53 and ₹77.64, higher from ₹82.10, ₹78.99 and ₹77.05 per litre respectively.

Diesel prices in these cities were ₹72.64 (Mumbai), ₹72.18 (Chennai) and ₹69.80 (Kolkata), compared with ₹72.03, ₹71.64 and ₹69.23 respectively on Saturday.

The increase in prices varies across metros, depending on the tax structure on products in various states.

Prices of transportation fuel were halted under the dynamic pricing policy after March 16 and post that there were few instances of price hike only when the respective state governments hiked VAT or cess.

In a bid to increase revenues during the nationwide lockdown, several state governments raised taxes imposed on transportation fuel.

Already, the gap between cost and sale price of petrol and diesel for OMCs reached around ₹5-6 per litre. If this has to be covered over a period of time, given there is no further increase in global prices, auto fuel prices may be increased by 40-60 paise per day for a few more days to cover the losses.

The increase in retail prices under daily price revision would largely depend on prevailing oil prices and the global oil market at the time.

However, the lockdown has also decreased the demand for auto fuel. This could maintain some check on prices.

Raising retail prices has become important for OMCs now as the recent steep excise duty hike without a resultant increase in petrol and diesel prices had substantially brought down its marketing margins from record-high levels of ₹12-18 per litre.

If OMCs are unable to raise prices when the global crude prices are rising, they would start incurring losses that will get steeper.