SME Times News Bureau | 21 Nov, 2020
Oil marketing companies (OMCs)
on Saturday raised the retail price of petrol and diesel for the second
consecutive day after a break of almost two months.
The price of
petrol has increased by 15 paisa per litre in the national capital to Rs
81.38 from Rs 81.23 a litre on Friday. Similarly, retail price of
diesel has been increased by 20 paisa per litre to Rs 70.88 per litre in
Delhi.
With the price revision, the retail price of both the
auto fuels has also been increased across the country but the level of
increase is different across the cities due to variable taxation
structure pursued by the states.
The increase in petrol and
diesel prices was expected as global oil market has 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 close to $45 a
barrel for some time now while US WTI crude is also over $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.
OMC sources said that auto fuel hike on Friday and Saturday
may not end just yet 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.
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 up to 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 the option is exhausted, regular price revision
could restart.
