Fuel prices in India have continued to fall for the 12th day, finally leading to petrol price in Mumbai to settle below Rs 80 a litre as oil companies have cut prices almost daily on back of lower crude oil prices. The diesel price has been cut by nearly Rs 1.46 a litre in the 12 days, while diesel price has been cut by Rs 1.78 per litre. The biggest fall in the daily revision of the petrol price was recorded on Saturday last week when it was by 29 paise.
The petrol prices on February 19 were: Delhi Rs 71.92 a litre; Kolkata Rs 74.63; Mumbai Rs 79.80; and Chennai Rs 74.58, while the diesel prices were: Delhi Rs 62.44 per litre; Kolkata Rs 65.10; Mumbai Rs 66.50; and Chennai Rs 65.83. The petrol price in Mumbai hovered above Rs 80 per litre for almost a month.
On the contrary, the crude oil prices have hit nearly a two week high over recovery in the equity markets and fears of tensions in the middle east, Reuters reported. The Brent crude oil was up 52 cents at $65.36 per barrel, while the US West Texas Intermediate (WTI) crude was up 73 cents to $62.41 per barrel. The international crude oil price is, however, still lower than its December high. The international crude oil prices are one of the several factors taken into consideration while revising fuel prices.
In 2010, the government announced deregulation of fuel prices and they are now being revised by oil companies based on the free-market system. However, the central government can influence the fuel prices by increasing or decreasing the excise duty and state governments by Value Added Tax (VAT).
In October last year, the central government announced an excise duty cut of Rs 2 a litre on petrol and diesel to cushion the impact of rising fuel prices then, followed by four states that announced a cut in the VAT.
The government has indicated that it may announce another excise duty cut when and if crude oil touched $75 a barrel, ruling out any immediate intervention. Since June 16 last year, fuel prices are being revised daily between 1 paisa and 15 paise instead fortnightly, which many say go unnoticed.