1. Government steps in to save people from rising fuel bill; may check petrol, diesel prices

Government steps in to save people from rising fuel bill; may check petrol, diesel prices

As the petrol and diesel prices have hit three-year highs in some cities, the government seems to have swung into action to protect the consumers from the rising fuel bills, possibly bringing back the ghosts of the era of regulation.

By: | Updated: September 13, 2017 3:05 PM
The government is unlikely to pass further rise in fuel prices to the public due to higher inflation, television news channels reported. (Image: Reuters)

As the petrol and diesel prices have hit three-year highs in some cities, the government seems to have swung into action to protect the consumers from the rising fuel bills, possibly bringing back the ghosts of the era of regulation.

Not only is the government assessing the trajectory of oil prices, it may ask the oil marketing companies to absorb further increase in global crude oil prices, news channels ET Now and CNBC TV18 reported on Wednesday citing unidentified government sources. The government is unlikely to pass further rise in fuel prices due to higher inflation, the reports added.

The possible government intervention to keep the retail fuel prices in check comes after the news reports highlighted that the petrol and diesel prices have risen to the levels last seen three years ago in metro cities of Mumbai, Kolkata and Chennai, only, without the people noticing it much this time.

Up, and away

The petrol in Mumbai has risen to Rs 79.48 per litre, a level last seen in August 2014 in the country’s financial capital. Similarly, the price of diesel is at a three-year high in the metro cities of Kolkata and Chennai at Rs 61.37 and 61.84 per litre respectively. Retail fuel prices are on an steady upmove, rising in small doses almost everyday since the introduction of the dynamic fuel price revision mechanism nationwide in June this year.

If the government does intervene to check the fuel prices, it will bring back the memories of the days when petrol and diesel price movements were much hyped events with the government dictating how much the oil refining and marketing companies could charge. The price of petrol was under the government control when the crude oil was at its peak.

De-coupled

Biting the bullet, the government deregulated the price of the fuel from its control in 2010, allowing the oil refining and marketing companies to set it in line with the market dynamics, specially crude oil prices. Following that, the price of petrol rose in line with the rise in crude oil prices till the early 2013.

However, the crude oil prices began falling after that, but the petrol prices either kept increasing, or kept steady in spells. And now petrol still trades firm, while crude oil price is under a huge pressure. Not to mention the support to oil downstream companies from a firm rupee, which is up 6.3% so far this year, resulting in lower expenses for them per dollar spent on buying crude oil.

Earlier this year, the government introduced dynamic fuel pricing on June 16 — a mechanism for revising retail fuel prices daily across the nation in conjunction with the change in the crude oil prices. Narendra Modi administration’s scheme ensured that the oil marketing companies do not feel the pinch of keeping fuel prices static for up to 15 day even if the crude oil starts rising rapidly, as was the earlier practice.

Dynamic move

Immediate price cuts followed. Petrol prices fell by Rs 3.45 per litre in just a span of 13 days, with the oil companies cutting prices or keeping it unchanged for 12 days in a row. Then, it started rising, beginning with a humble 1 paisa per litre hike on June 28-29 — an amount not worth batting an eyelid.

Petrol price has been on the upmove since then, with the oil companies continuously raising it in small doses everyday, barring a few even smaller cuts in between. Since July 1, petrol price in Delhi has risen by Rs 7.29 per litre to Rs 70.38 per litre today (Wednesday, 13 September, 2017), though this seems to be in line with the over 12% rise in the prices of the Indian basket of crude oil in rupee terms during the same period.

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    Manoj Kumar Sharma
    Sep 13, 2017 at 6:30 pm
    Yes,its a matter of concern for common man.He is simply watching central Govt.move. These are the indications who tilts voters to make up their mind to choose party in next General election in March-April19.
    Reply
    1. Hemant Kumar
      Sep 13, 2017 at 6:16 pm
      Hi, Oil companies are not charging more, it is state and central government charging more tax on the fuel. the actual cost of the petrol charged by oil companies to dealers is only Rs. 30.70 (todays price). remaining amount is shared by state and center governments. If the petrol is brought under GST with 28 slab, then the price to consumer will be Rs. 39.3 per litre. we all should demand the government to bring the price of petrol under GST
      Reply
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        Ajay
        Sep 13, 2017 at 5:14 pm
        When international prices of crude rise these oil compnies are quick to jack up fuel prices BUT when the prices fall in the international market these cos DO NOT reduce the said prices. WHY?
        Reply
        1. R
          R Kapoor
          Sep 13, 2017 at 5:12 pm
          Crude price was 115 dollars when Modi came to power. Now it is 53 dollars Petrol price was Rs78 when he came to power and now it is the same rupee has appreciated against the dollar also What happened to the difference of 63 dollars of crude price coming down?
          Reply
          1. A
            Ajay
            Sep 13, 2017 at 5:11 pm
            These high prices of fuel in India have no justification. It is time the government stepped in to stop these oil marketing cos from bleeding the poor consumer. International crude prices are down by 50 BUT here in India the fuel prices are the same as they were earlier.
            Reply
            1. S
              Shanks
              Sep 13, 2017 at 5:06 pm
              Govt has been creaimg windfall gains for the last 3 years with frequent raise of fuel tax to shore up revenue. Should rationalise fuel tax rather than asking oil companies to take a haircut and reducing their ability to invest in augmenting capacity.
              Reply
              1. A
                Ashish Shrivastava
                Sep 13, 2017 at 4:45 pm
                Situation going worst.... Needless to say... we are paying for inefficacy of Oil companies... Govt. must look in to it....check if they increased their expenses or showing more loss in Crude Oils has fallen down... Check what happened to 1st Oil Supply from USA, weather they have drunk it.....
                Reply
                1. Hemant Kumar
                  Sep 13, 2017 at 6:14 pm
                  Hi, Oil companies are not charging more, it is state and central government charging more tax on the fuel. the actual cost of the petrol charged by oil companies to dealers is only Rs. 30.70 (todays price). remaining amount is shared by state and center governments. If the petrol is brought under GST with 28 slab, then the price to consumer will be Rs. 39.3 per litre. we all should demand the government to bring the price of petrol under GST
                  Reply
                2. D
                  Dr Moore
                  Sep 13, 2017 at 4:35 pm
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                  Reply
                  1. Hemant Kumar
                    Sep 13, 2017 at 4:19 pm
                    Dear Sir, You report is one sided. Government is not giving any subsidy to the consumers. We consumers are paying roughly 3,50,000 crores as taxes and duties on the petrol and diesel purchase what we make per year. You ask Government to bring petrol and diesel price under GST and put under 28 slab. with this move the price of Petrol and diesel will come down to half of the existing price. Government need not regulate or help the consumers in the way of subsidy. Please check the price build up of petrol and diesel in the s of IOC. At present we are paying roughly 156 tax. To whom you are trying to fool and Government is trying to fool.
                    Reply
                    1. V
                      Verge
                      Sep 13, 2017 at 4:00 pm
                      The tax on petrol and diesel is in the range if 120 -160 today. Why is it so high? On top the oil marketing companies are just increasing the pricees. Whom can people trust now? Both are looting the public.
                      Reply
                      1. H
                        Hari
                        Sep 13, 2017 at 3:41 pm
                        The govt is taken benefit of lower international price by increasing taxes and duties so far but no relief of lower crude price was passed on to people which are highly unjustified and shocking. The abnormal increase in crude prices resulted in inflationary pressure on all commodities. In past Congress govt lost power all over the country due to high inflation and rampant corruption prevailing in the country. The same story is again repeated by BJP which may land them in serious trouble in 2019 Lok Sabha elections. CORRUPTION IS BIGGEST EVIL OF THIS COUNTRY WHICH IS NOT CURBED BY MODI GOVT.
                        Reply
                        1. H
                          Hari
                          Sep 13, 2017 at 3:40 pm
                          The govt is taken benefit of lower international price by increasing taxes and duties so far but no relief of lower crude price was passed on to people which are highly unjustified and shocking. The abnormal increase in crude prices resulted in inflationary pressure on all commodities. In past Congress govt lost power all over the country due to high inflation and rampant corruption prevailing in the country. The same story is again repeated by BJP which may land them in serious trouble in 2019 Lok Sabha elections. CORRUPTION IS BIGGEST EVIL OF THIS COUNTRY WHICH IS NOT CURBED BY MODI GOVT.
                          Reply
                          1. S
                            shashank
                            Sep 13, 2017 at 3:16 pm
                            why is government not cutting on its own duty which it levies on fuel??? it was raised from Rs10 to Rs22 when the fuel was cheap...it filled in government coffers....its high time that government reduce this high duty charge so that inflation remains under control....
                            Reply
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