Proliferating Fuel Prices Hit Record High
Petrol prices rose to approximately Rs.80 in Delhi and Rs. 87.39 in Mumbai, rising for the second consecutive day on 7th September 2018. Diesel also saw it’s record high price at Rs. 72.07 and Rs. 76.51 in Delhi and Mumbai respectively.
The proliferating fuel prices are largely attributed to the recent rise in crude oil cost and high excise duty levied on fuel in the country. The tension over crude oil prices stems from India’s high energy needs met primarily through imports, with the country importing 214 million tonnes of crude oil in the last session.
Extreme volatility has marked crude oil prices, which reached a record $147 per barrel in 2009. Petroleum prices may continue to rise due to the US sanction on Iran and also due to Saudi Arabia’s decision to cut oil productions.
Iran, which is the second biggest oil exporter to India and the third largest Global oil producer in the OPEC (Organization of the Petroleum Exporting Countries), is set to plunge into crisis once the sanctions of the US comes to effect on November 1.
The fall of the Indian rupee against the US dollar is also cited as a reason for the proliferating fuel prices. That is why oil marketing companies (OMC’s) like Bharat Petroleum (BPCL), Indian Oil Corporation (IOCL) et cetera are paying more for the same oil prices.
Due to this, the OMC’s have lost nearly 4300 crores in the past for selling petrol at low costs. The proliferating fuel prices have triggered demands for a reduction on excise duty but the government has ruled out any such cut. The central government currently levies Rs. 19.48 per litres of excise duty on petrol and Rs.15.33 on diesel and then on top of this, the states levy VATs (Value Added Tax).
The proliferating fuel prices will have a great impact on India’s import bills and trade deficits. It will also reverse the declining trend on inflation and put pressure on the central and state government to lower the prices which can adversely affect the non-goods and services tax revenues.
BJP president Amit Shah at a meeting said that the government has taken cognizance of the matter of the proliferating fuel prices and will take serious measures to curb the problem. “The government at the highest level is concerned about it and is taking the matter seriously”, he added.
He also said that the Petroleum minister Dharmendra Pradhan is meeting representatives of oil companies and will work out a solution soon. The Congress in the meanwhile has taken a dig at Prime Minister Narendra Modi for the hike in fuel prices.
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