Oil companies lose ₹4 on petrol, ₹2 on diesel due to 20-day price freeze
Petrol and diesel prices have been steady for straight 20 days across India after the last revision on 27th February. While this has brought much-awaited relief for the motorists and common people, at least to some extent, the price freeze has cost the oil marketing companies to lose ₹4 on petrol, ₹2 on diesel. However, if the price freeze was not imposed, petrol would have cost more than ₹103 per litre in Mumbai, where the current pricing for the fuel is ₹97.57 per litre.
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Also, petrol would have cost around ₹100 per litre in many other cities across the country by now, had the daily price revision not frozen. The daily price revision of petrol and diesel across India was stopped a day after the assembly elections in five states were announced. Interestingly, during these last 20 days, India’s crude expense has increased from $64.68 per barrel on February 26 to $66.82 on March 17, hitting $68.42 in between. The rupee too has lost its strength during this 20-day period against the dollar at 72.57 on March 17.
The oil marketing companies usually consider a 15-day rolling average for pricing crude oil. As Brent crude has been ruling high and has shown a slight reduction in the last few days, the average is still high for the refiners.
The sharp price hike for petrol and diesel in February has caused quite a stir among people. There has been widespread demand for a tax cut by the central government, which had increased the excise duty sharply in 2020. The central excise duty and state government’s VAT contribute nearly 60% of the pump prices for both petrol and diesel, while other components include dealer commission.
Due to the sharp recent hike petrol at a time shot past ₹100 mark in some towns of Rajasthan on 17th February, which was the first time in India. A couple of states like Assam, Meghalaya and West Bengal announced cut in their share of taxes to reduce the burden on common people. However, that was not sufficient; as prices of the motor fuels are still over ₹90 in many states. Since then, there has been a demand to bring petrol and diesel under the ambit of GST, which is expected to bring uniformity in the auto fuel prices.