SME Times News Bureau | 20 Nov, 2020
Oil marketing companies (OMCs)
on Friday raised the retail price of petrol and diesel after a break of
almost two months when auto fuel prices remained static on Covid
affected global oil market.
The price of petrol has increased by
17 paisa per litre in the national Capital to Rs 81.23 from Rs 81.06 a
litre on the previous day. Similarly, retail price of diesel has been
increased by 22 paisa per litre to Rs 70.68 a litre.
While India
has brought both petrol and diesel out from an earlier administrative
price regime and their retail prices are revised daily based on global
movement product prices, holding the retail price revision for almost
two months was surprising. At a time when globally prices change by the
hour, in India it could be kept static for such a long period.
Every
dollar increase in price of crude results in retail price of petrol and
diesel to be increased by upto 40 paisa per litre. This would mean that
the fuel prices should be up by at least Rs 1.20 per litre by now.
However,
oil companies have kept fuel prices static even when there was a need
to revise it downwards last month. That saving prevented OMCs from
increasing petrol and diesel prices by a higher margin. Now that option
is exhausted and regular price revision could restart.
With the
price revision, the retail price of the two auto fuel has also increased
across the country but the level of increase is different in different
cities due to variable taxation structure pursued by the states.
The
increase in petrol and diesel prices was expected as global oil market
had shown signs of firming up after positive news on successful
introduction of a coronavirus vaccine soon. Moreover, the demand for oil
and falling inventory levels in major consuming markets has also firmed
up crude price.
The benchmark Brent crude price is hovering over
$44 a barrel for some time now while the US WTI crude is also close to
$42 a barrel. The two have remained firm since the beginning of the
month after remaining soft in most parts of October at close to $40 a
barrel or less.
The OMC sources said that auto fuel hike on
Friday may not be one off exercise and the price of the two petroleum
products may increase gradually over the next week as well. This is
required to keep OMCs from incurring losses on the sale of petrol and
diesel.
