Crude below $40 but fuel prices echo oil at $65 due to tax hikes


NEW DELHI: Crude prices have dipped below $40 per barrel but consumers are yet to get the benefit of falling global prices. They continue to pay for fuel at rates corresponding to around $65, thanks to hefty tax hikes by the Centre and states.
On Monday, state-run fuel retailers raised pump prices for the ninth straight day, pushing petrol and diesel prices to their highest in nearly 21 months. After the latest increase, petrol price has cumulatively risen by Rs 4.98 per litre and diesel by Rs 5.23 since retailers resumed the daily price revision on June 7 after a gap of 82 days.
In the latest round, petrol price was raised by 46 paise per litre and diesel by 59 paise. As a result, petrol sold for Rs 76.26 a litre and diesel Rs 74.62 in Delhi on Monday. The rates vary from state to state due to the difference in the VAT.
These prices are the highest since October 4, 2018 when petrol cost Rs 84 per litre and diesel Rs 75.45 in Delhi. During that month, India’s crude purchase averaged $80/barrel, while it is hovering around $35-36.
Petrol price in Delhi had touched Rs 76.01 per litre and diesel Rs 67.96 on January 2 when India’s crude cost stood at $66/barrel.
Consumers are currently not getting any relief because taxes have risen to nearly 70% from an average 50% before the Centre raised excise duty on both fuels by Rs 3 per litre from March 16. Again on May 6, Central levies were raised by Rs 10 per litre on petrol and Rs 13 per litre on diesel as crude prices collapsed.
A day earlier, on May 5, the Delhi government had raised VAT, making petrol costlier by Rs 1.67 a litre and diesel by Rs 7.10 – the highest-ever increase in the price of any fuel. Many other states also raised VAT to mop up resources.
The state-run retailers offset both the excise duty hikes against their margins, leaving no scope for offering relief to consumers. Now that oil has rebound from the $30/barrel level to around $38/barrel, they are left with no choice but to pass on the impact.

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