Even as global crude oil prices fell by about 2%, the rally of auto fuel rates continued unabated on Tuesday that saw petrol breaching the ₹100 mark for the first time in West Bengal and crossing ₹110 a litre in Rajasthan’s Ganganagar.
State-run fuel retailers raised petrol and diesel rates on Tuesday by 35 paise a litre and 28 paise respectively, the 32nd hike in 57 days, which made petrol costlier by ₹8.41 per litre and diesel by ₹8.45 since May 4, a day after results of five assembly polls were declared.
Benchmark Brent crude fell 1.96% to close at $74.68 a barrel on Monday after hitting its highest since October 2018 at $76.18 on Friday. Brent on Tuesday fell further by 0.51% at $74.30 during the early trade.
International oil prices softened because of rising Covid-19 cases in Asian and European countries, and in anticipation of restoration of crude supplies by oil cartel and its allies (OPEC+) on July 1. Domestic fuel retailers align pump prices of petrol and diesel with respective international benchmarks of previous day, which often move in tandem with crude oil rates.
On Tuesday, West Bengal joined the club of states and Union Territories (UTs) where petrol rates have breached ₹100 mark as Darjeeling pumps are now selling petrol at ₹100.08 a litre and diesel at ₹93.16.
The unidirectional upward movement Since May 4 saw petrol already crossing ₹100 mark in various cities across the country, particularly in states and UTs of Maharashtra, Rajasthan, Andhra Pradesh, Madhya Pradesh, Karnataka, Telangana, Odisha, Manipur, Jammu & Kashmir, Laddakh, Punjab, Bihar, Kerala, Tamil Nadu and West Bengal.
Some of the cities selling petrol for over ₹100 per litre are Mumbai, Ratnagiri, Parbhani, Aurangabad, Jaisalmer, Ganganagar, Banswara, Indore, Bhopal, Gwalior, Guntur, Kakinada, Chikmagalur, Shivamogga, Hyderabad, Leh, Imphal, Kalahandi, Sopore, Baramulla, Patna, Salem, Thiruvananthapuram, Mohali and Darjeeling.
Petrol and diesel in Delhi are now sold at record ₹98.81 per litre and ₹89.18 a litre, respectively. While fuel rates in Delhi are the benchmark for the entire country, retail prices of the two fuels differ from place to place because of variations in state taxes and local levies.
Both petrol and diesel rates have crossed the ₹100 mark in Rajasthan’s Ganganagar, where auto fuels are the most expensive. The city pumps have prices petrol at ₹110.04 per litre and diesel at ₹102.42 a litre on Tuesday.
The financial capital has the highest fuel rates among five metros where petrol is currently sold at ₹104.90 per litre and diesel at ₹96.72 a litre.
Surging international oil rates and exorbitant domestic tax structure are two key reasons for high rates of petrol and diesel in pumps.
In Delhi, central levies account for 34.03% of petrol’s price and state taxes, 23.08%, according to an official data of June 16. On diesel, central taxes are over 36.38% while state taxes are about 14.63%. Through 2020, as global crude prices fell, the central government raised excise duty on the fuel to shore up its finances. States too followed suit — with revenues hit on account of the pandemic.
Even as international oil prices saw volatility since May 4, pump rates of auto fuels in India moved only in the upward direction. For instance, despite Brent crude had plunged to $65.11 on May 20, the lowest in these 46 days; petrol and diesel rates went up the next day by 19 paise per litre and 29 paise a litre, respectively.
According to executives working in state-run oil marketing companies, pump prices are also high because companies were recovering their past revenue losses like the one suffered for 66 days since February 27 when rates were not raised because of assembly elections in four states and one Union territory.
During the 66-day pause on rate hike, state-run retailers had also reduced politically sensitive petrol and diesel rates by 77 paise and 74 paise a litre, respectively in four small steps. But, the entire gains to the consumers were quickly reversed in the first four consecutive rounds of rate hikes starting from May 4.
The government deregulated the pricing of petrol on June 26, 2010 and diesel on October 19, 2014. Accordingly, state-run retailers are free to change pump prices every day. Public sector retailers — IOC, Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL)— controls almost 90% of the domestic fuel retail market.