New Delhi: Fuel consumers could have got over Rs 2 per litre relief while filling up their vehicle’s tank with petrol and diesel but due to the reluctance of oil marketing companies to trust the current softening of global oil prices, it is not happening.
Even though global crude oil prices have fallen in the last couple of weeks to reach a level close to $65 a barrel from a high of $77 reached early last month, there has been no commensurate cut in petrol and diesel rates in India.
While petrol prices are static for the past 35 days, diesel prices have been cut only by 60 paise per litre over the last three days. Even on Saturday petrol remained at the same level (Rs 101.84 per litre) that was reached on July 17. Diesel prices (now at Rs 89.27 a litre) also remained unchanged on Saturday after three consecutive days of price cut of 20 paise per litre each.
In the month of July, Indian basket crude has remained on an average at $73.54 a barrel. But in August, based on global benchmark prices, crude has averaged around $70.58 a barrel and the average is expected to fall further in the coming days as global oil softens on pandemic related demand concerns.
As per oil industry experts, every $1 change in crude normally affects the retail price of petrol and diesel roughly by 45-50 paise a litre with no major change in the rupee-dollar exchange rate. If this calculation is applied, the retail price of petrol and diesel should have started falling from this week in India with OMCs requiring to bring down rates by over Rs 1.5-2 per litre in few days or at one go.
Under daily price revision, OMCs revise petrol and diesel prices every morning benchmarking retail fuel prices to a 15-day rolling average of global refined products’ prices and dollar exchange rate.
“The previous fortnight provided an opportunity to OMCs to cut retail fuel rates. However, they have chosen to wait and watch as crude is still swinging on daily basis rising and falling consistently. Things would get clearer when more crude starts entering the market from next month by OPEC countries. This could soften oil prices if there is no big pickup in demand and US inventory levels remain stable,” said an oil sector expert not willing to be named.
If we see the average price of the Indian basket of crude for the past three months things become clearer on retail pricing of auto fuels. Crude averaged around $66.95 in May, $71.98 in June and $73.54 in July. So the crude increased by around $6.5 a barrel in the last two months. This as per calculations should have pushed up petrol and diesel prices by about Rs 3.50 per litre during the period. But, fuel prices during the period has gone by more than Rs 7 per litre giving the OMCs all the more reason to cut prices at least now.
There have been occasions in past one month when OMCs could have provided relief to consumers by cutting fuel pump prices. But, this has never been applied so far and OMCs seem to be satisfied by keeping petrol, diesel prices unchanged. And at the first instance of market indications, fuel prices have been increased.
The 35-day long price pause for the retail rate of petrol has come after fuel prices increased on 41 days since May 1. The 41 increases have taken the petrol prices up by Rs 11.44 per litre in Delhi. Similarly, diesel has increased by upto Rs 9 per litre in the national capital only for its price to come down by 60 paise per litre now.
Since April 2020, petrol prices have increased by Rs 32.25 per litre from Rs 69.59 a litre to Rs 101.84 a litre now in Delhi. Similarly, diesel prices during the period have increased by Rs 26.98 per litre from Rs 62.29 to Rs 89.27 a litre in the national capital.
By Subhash Narayan
