Petrol and diesel prices hiked for the 4th time in five days
On Saturday, it is reported that Petrol and Diesel’s prices have increased by 80 paisa/litre. It is the fourth increase in 5 days.
According to a price notice from state fuel retailers, petrol will now cost Rs 98.61 per litre in Delhi, and diesel will cost Rs 89.87.
Prices had been frozen in anticipation of assembly polls in some states, during which time the cost of raw materials had risen by around USD 30 per barrel.
Oil firms, who failed to raise gasoline and diesel prices for a record 137 days despite crude oil prices climbing to $117 per barrel from about $82 in early November, are finally gradually passing on the mandated rise to consumers.
The recent increase in fuel costs coincides with an increase in oil prices as a result of the ongoing Russia-Ukraine war. The increase also comes after a 137-day period in which fuel prices were held constant across the country.
According to Discover Financial Services, state-owned gasoline retailers Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) collectively lost $2.25 billion in income during the election cycle.
Why prices are increasing
The most important question arises here is why there is an increase in the prices of petrol and diesel? It is crucial to understand that these are imported commodities.
We now have to import 86 per cent of our overall oil consumption. Oil prices are not under the control of any authority. Both gasoline and diesel are considered deregulated commodities. The deregulation of fuel was undertaken by former Prime Minister Manmohan Singh’s cabinet in July 2010. Diesel was deregulated by the Modi government in 2014.
On Monday, the central government noted rising crude oil costs after the Russia-Ukraine conflict and said it is closely monitoring global energy markets because of the changing geopolitical scenario.
Global crude oil prices have risen sharply as a result of the political scenario between Russia and Ukraine. In a news Union Minister of State said, “The Government of India is closely monitoring global energy markets as well as potential energy supply disruptions as a result of the growing geopolitical situation.”
The COVID pandemic is the primary cause of rising oil prices on the global market. One of the main reasons for petrol and diesel costs rising is because supply is restricted and consumption has increased every day.
The price of crude oil is approaching its highest level since 2018 as the global economy resurfaces. India’s vehicle fuel prices have reached new highs. The Petroleum Ministry has repeatedly declared that it is in talks with vital oil-exporting countries to enhance crude supplies and lower the official selling price for Asia.
In response to the question of what state governments should do to reduce fuel prices, 32 per cent said the government should levy an absolute value of value-added tax (VAT) rather than a percentage of the base price, and 47 per cent said the VAT rate should be reduced.
For the past three months, Indian Oil Corporation, Bharat Petroleum Corporation, and Hindustan Petroleum Corporation, who together control more than 90% of the domestic market, have put a halt to price rises. But in the last five days, we have seen a significant change in the prices.
Brent Crude broke through the $85 per barrel barrier earlier this week, thanks to a surge in worldwide demand as the global economy rebounds from the pandemic.
How prices of petrol and diesel affect common people
Increased fuel prices have impacted both those who possess and those who do not have a vehicle. It suffices to say that the Indian economy, as well as end-consumers, have been heavily reliant on petrol and diesel in recent years.
Even though the growth rate in petroleum product demand has slowed in recent years, the demand for main petroleum products has continued to rise. And this increase in use has been accompanied by a steady rise in gasoline and diesel prices. Apart from the fact that India imports 85 per cent of its crude oil, whether the price increase is due to an increase in international pricing or a rise in government taxation, the end effect is that ordinary people are affected both directly and indirectly by the price increases.
Petrol and diesel are used by the average person both directly and indirectly. They use petrol for cars and trucks, taxis, two- and three-wheelers, and diesel for road transport and agriculture directly. Obliquely, because most of the goods and commodities they consume are carried using gasoline, this amounts to indirect consumption. While lighter renewable energies such as auto LPG are accessible in the country, the associated infrastructure has yet to develop to the level that it should be due to a lack of government incentives.
Increased fuel prices in India
The main reasons for the high rates of petrol and diesel in India are the stabilization of worldwide crude oil prices and the imposition of exceptionally high gasoline taxes.
After the Organization of Petroleum Exporting Countries (Opec) decided to keep production limitations in place, global crude oil prices rose.
As the world’s third-largest oil importer, India has been adversely hit by the recent firming of worldwide crude oil prices.
So In this article, we have understood various impacts of the fluctuating prices of oil that can impact the whole economy. There are some other examples as well. According to a survey, pollution killed approximately 1.67 million Indians in 2019 due to a variety of disorders such as heart attacks. According to studies, a combination of air pollution from fossil fuel combustion has a disproportionately negative impact on children’s health and development.
As a result, the government should not delay the economic and health benefits that can accrue to the common man by increased use of auto LPG rather than petrol and diesel. Instead, there should be a policy framework to set in motion a nationwide shift away from gasoline and diesel as a mobility fuel.
Edited by Prakriti Arora