Auto fuel prices reach new high with rising crude rates

By: |
October 06, 2021 2:50 AM

Retail petrol prices were also kept unchanged (at Rs 101.84/litre in Delhi) between July 17 and August 21, while global crude corrected from around $73/barrel to about $65/barrel in the same period.

Petrol DieselIn March and May 2020, surcharge and cess on auto fuels were cumulatively increased by Rs 13 per litre on petrol and Rs 16 per litre on diesel, leading to record-high auto fuel rates.

With global Brent crude oil rates sustaining over $80/barrel in the last few days, state-run oil marketing companies (OMCs) have increased retail prices to new record-high levels.

Pump price of petrol in Delhi was Rs 102.64 per litre on Tuesday and diesel, crossing the Rs 91-mark for the first time, was sold at Rs 91.07/litre. The price hikes was inevitable as international crude oil prices increased by around $5 per barrel between September 5 and September 23, when retail auto fuel prices were kept unchanged.

Retail petrol prices were also kept unchanged (at Rs 101.84/litre in Delhi) between July 17 and August 21, while global crude corrected from around $73/barrel to about $65/barrel in the same period.

International crude rates started rising after hurricane Ida slammed into the US Gulf Coast during the last week of August. This had helped OMCs improve their marketing margins to Rs 3.2/litre and Rs 4.6/litre for petrol and diesel, respectively, analysts had said.

Apparently, the OMCs had been deferring cuts in fuel prices to make up for the losses suffered between late February and May, when they could not hike the prices in conformity with the crude movements, due to Assembly elections in four states and the UT of Puducherry. The marketing margin on petrol was almost zero on July 20, and the margin on diesel was Rs 2.9/litre.

Analysts at Kotak Institutional Equities had estimated OMC marketing margins to have improved further to Rs 4.7/litre for petrol and Rs 6.6/litre for diesel as on September 7.

At present, the prices charged to dealers by Indian Oil Corporation are Rs 41.63/litre for petrol and Rs 42.58/litre for diesel. The Centre’s tax (basic excise, surcharge, agri-infra cess and road/infra cess) is currently Rs 32.9 per litre for petrol and Rs 31.8 per litre for diesel, while Delhi state VAT is Rs 23.5 per litre on petrol and Rs 13.2 per litre on diesel.

In March and May 2020, surcharge and cess on auto fuels were cumulatively increased by Rs 13 per litre on petrol and Rs 16 per litre on diesel, leading to record-high auto fuel rates.

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