Petrol and diesel retail prices: After the increase in the prices of crude oil, now after 137 days on March 22, the oil marketing companies have increased the prices of petrol and diesel. Petrol and diesel prices have been hiked by about 80 paise per litre. At the same time, industry experts are expecting a further increase in prices.
Now petrol is getting Rs 110.78 per liter and diesel Rs 94.94 per liter in Mumbai. At the same time, the price of petrol in Delhi is Rs 96.21, while diesel is Rs 87.47 per liter.
However, this increase in prices did not surprise the market. Let’s take a look at why the fuel hike was expected and what could happen next:
Why were prices expected to rise?
Earlier, petrol prices were hiked on November 2, a day after diesel prices were hiked. On November 4, the government reduced the excise duty on petrol by Rs 5 and on diesel by Rs 10 per liter. At that time the price of crude oil was around Rs 80 per liter.
Brent crude rose to $139.13 a barrel on March 7, the highest level since July 2008, due to the Russo-Ukraine war. However, now it has come down to $ 118. At the same time, the prices of fuel have not changed in comparison to this in government oil marketing companies.
HPCL Chairman Mukesh Kumar Surana had said in an interview to Moneycontrol on February 25, “Oil marketing companies take a long-term view of prices and make changes in line with the international market to protect the consumers from day-to-day fluctuations.
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Nayara Energy, which operates Essar’s 6,500 fuel stations in India, told Moneycontrol on March 21 that its margins have come down significantly due to non-change in the price of petrol and diesel despite the steep hike in crude prices. .
Private companies, including Nayara, Reliance Industries and Shell, decide the prices themselves, but in view of the competition, the prices fixed by the oil marketing companies are considered as the benchmark.
The government has denied any link between the hike in fuel prices and the recent assembly elections in five states.
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By how much can the prices go up?
According to industry experts, every $1 increase in crude prices results in an increase of 50-60 paise per liter in fuel. Since November, crude has become costlier by $38 per barrel. This means that there could be an increase of Rs 19-24 per liter.
Bulk diesel prices are around Rs 25 higher than retail, indicating an increase in retail prices. However, experts said the entire increase cannot be passed on to the consumers and the growth will be gradual.
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How can I get support for retail prices?
Some officials said that oil marketing companies may look at their entire business before fixing the limit for hike in fuel prices. This could be offset to some extent by improvement in refining margins. This will help cover some of the rise in crude prices.
The industry expects the government to cut excise duty, as it did in November. This may also compel the states to reduce taxes. Duties and taxes account for 40-50 per cent of the retail price of fuel.
However, the decision to cut excise duty will not be easy, as it will result in significant loss of revenue.
The government will also keep an eye on the fact that due to the cost of fuel, inflation can also increase. If fuel, especially bulk diesel, continues to become costlier, the cost of transportation of commodities will increase, leading to inflation.
Disclosure: Network 18 Media & Investment Limited is a proprietary concern of Independent Media Trust. Its beneficiary company is Reliance Industries.
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