Fuel price has gone up again to new record highs across the country with top government officials insisting that oil companies haven’t passed on the entire increase warranted from international oil and gas rising to three-year highs. According to a price notification of state-owned fuel retailers, petrol price is up by 25 paise a litre and diesel by 30 paise.
This sent petrol price in Delhi to its highest ever level of Rs 102.39 a litre and to Rs 108.43 in Mumbai. Diesel rates also touched a record high of Rs 90.77 in Delhi and Rs 98.48 in Mumbai. It should be noted that prices differ from state to state depending on the incidence of local taxes.
The basket of crude oil India buys has jumped to a near three-year high of USD 76.71 per barrel. International prices of petrol, against which local rates are benchmarked, have risen from USD 85.10 per barrel to USD 87.11 in just one day while diesel has gone up from USD 85.95 a barrel to USD 87.27.
Tarun Kapoor, Petroleum Secretary, said oil companies are taking their own decision on aligning retail rates with the cost but they are ensuring extreme volatility is avoided. “We are watching the situation and trying to ensure the impact of global volatility is moderated to a large extent,” he said.
An official said the sudden spike in international oil prices follows global output disruptions but the entire increase in retail rates necessitated by such an increase is not being effected. “Just look at LPG rates. They have gone up from USD 665 to USD 797 in one month, but oil companies haven’t passed on the increase warranted from that,” he explained. “The increases have been mild to moderate. Some people are making a big deal out of the 62% hike in natural gas prices. But if you look at the rates previously at USD 1.79 per million British thermal unit were abnormally low and way below cost. They have gone up to USD 2.9. They still are less than the cost of production of USD 3.5 per mmBtu and are certainly lower than the USD 4.2 price that was prevalent in India a decade ago.”
The official said compared to what is happening worldwide, India has managed the situation well. “Some of the developed nations such as UK have seen petrol pumps go dry but you won’t have heard of such a situation in India. Our oil companies are not just moderating retail prices, but also ensuring uninterrupted supplies.”
India is dependent on imports to meet nearly 85% of its oil needs and so benchmarks local fuel rates to international oil prices.