Why such hike in Petrol-Diesel Price?

Why such hike in Petrol-Diesel Price?

Diesel and petrol prices have reached new record levels in many cities across the country on Tuesday. On one hand, the price of crude oil is increasing in the global market, on the other hand the state and central governments have increased tax to increase revenue. It is believed that this increase in fuel prices will have the greatest impact on the urban population.

New Delhi: Diesel and petrol prices across the country are reaching new record levels. On Tuesday, the price of diesel in the capital Delhi has reached Rs 79.70 and the price of petrol has reached Rs 89.29 per liter. However, today the price of high quality petrol in Bhopal has crossed Rs 100. Today XP petrol is being sold at Rs 100.18 per liter in Bhopal. The government says that since October 2020, the price of crude in the international market has risen by about 50 percent to reach $ 63.3 per barrel. Because of this, oil retailing companies have to increase the prices of petrol and diesel. It is worth noting that the price of diesel-petrol is higher this year compared to January last year. However, so far the price of crude oil is less than in January last year.

Why has the price of petrol and diesel increased so much in India?
Actually, the retail price of petrol-diesel in India is linked to the price of crude oil in the global market. This means that if the price of crude oil is low in the global market, then petrol-diesel will be cheaper in India. If the price of crude oil increases then more will have to be spent for petrol-diesel, but this does not happen every time. When the price of crude oil rises in the global market, its burden is put on the customers, but when the price of crude oil is low, the government imposes tax on the customers to increase its revenue. In this way, due to the decrease in the price of crude oil in the global market, people do not get any special relief.

Only last year, when the Corona virus pandemic started, there was a big drop in the price of crude oil. Oil companies did not change the price of retail fuel for 82 consecutive days. In this way, customers did not get the benefit of cheap crude oil in the first 6 months of 2020, while in the second 6 months, the government imposed a tax burden.

Why is the price of crude oil increasing?

During April 2020, there was a historic decline in the price of crude oil after the worldwide fuel demand decreased. During that time, economic activities were going on in almost negligible countries around the world. From travel to factories everything was shut down, but since then the demand for oil has increased globally. Brent crude, which traded at around $ 40 a barrel between June and October, started getting expensive after November. Now after the introduction of Corona virus vaccine, it has crossed $ 60 per barrel.

The reduction in the production of crude oil is also a reason, due to which there is a rise in the price. Saudi Arabia has decided to cut crude oil production by one million barrels per day during February-March.

What will be the effect of this tax on retail prices?

In the last one year, the central government has increased the excise duty on petrol to Rs 32.98. At the beginning of 2020 it was Rs 19.98. Similarly, excise duty on diesel has increased to Rs 31.83. In January 2020 it was around Rs 15.83. The government had increased this tax to increase revenue after the economic activities were almost stopped during the epidemic.