1. Why you are paying more for petrol now than in 2015 at same crude oil price

Why you are paying more for petrol now than in 2015 at same crude oil price

Brent crude oil price has hit a two-year high at $65.29 per barrel on Tuesday; the petrol price in New Delhi was Rs 69.09 per litre, more than Rs 63.16 per litre at the same crude oil price in May, 2015.

By: | Updated: December 12, 2017 6:47 PM
Why are you paying more for petrol now than in 2015 when crude oil price is same. (Image: Reuters)

Brent crude oil price has hit a two-year high at $65.29 per barrel on Tuesday; the petrol price in New Delhi was Rs 69.09 per litre. Last time, in May 2015, when Brent crude oil was $65.39, the petrol price in New Delhi on May 1, 2015, was Rs 63.16 per litre, which then jumped to Rs 66.29 per litre. It was still less than what you are paying today for the same crude oil price. Notably, the crude oil price is going to rise in future as well, which may pull up petrol price as well.

The biggest reason seems to be the excise duty that is being levied on the petrol price. In May 2015, the excise duty was Rs 15.4 per litre and now it is Rs 19.48 per litre. The central government did cut the excise duty in October to cushion the common man from rising oil prices by Rs 2 per litre but it still was Rs 4 per litre higher than May 2015.

Since April 2014, the government has hiked the excise duty on petrol by Rs 10 per litre. Data show that the government has the room to cut more, but it will lead to fiscal slippage. The Centre’s fiscal deficit during the first seven months (April-October) of the current fiscal was Rs 5.25 lakh crore, or 96.1% of the budgeted target for the current fiscal year that ends in March 2018.

The government aims to restrict the deficit to 3.2% of GDP in the current fiscal as against 3.5% in 2016-17.  In absolute terms, 3.2% deficit for the current fiscal works out to nearly Rs 5.47 crore. Besides, higher excise duty, inflation and price hike by oil companies also play a role in deciding retail price.

According to Nomura, every $10 per barrel rise in the price will worsen India’s fiscal balance by 0.1% and current account balance by 0.4 % of GDP. “For a net oil importer like India, a sustained rise in crude oil price would have adverse macroeconomic implications,” it said in a report.

Get latest news and updates on Auto Expo 2018, check breaking news on Budget 2018, like us on Facebook and follow us on Twitter.

  1. Ramesh M V
    Dec 12, 2017 at 11:16 pm
    Why comparing only Crude price in Dollars.. Pls check the price of Dollar in 2015 and 2017. The change in price is only the difference in Rupee Value against Dollar. I am neither a Bhakt nor a economist but still not happy with this biased looking report of
    Reply
    1. Viswanathan NS
      Dec 12, 2017 at 8:31 pm
      Did you notice last 20 odd days price has come down from 69.85 to 69.09 where as Crude Price is going up.
      Reply
      1. Ramesh M V
        Dec 12, 2017 at 11:18 pm
        This is true Sir.. Suddenly I feel FE is going biased or one sided.. Not a Bhakt but facts are seen and visible.
        Reply

      Go to Top