Petrol and diesel prices in India have been a topic of discussion for a long time, but now there is hope of some relief. For the first time after August 2021, the average import price of crude oil for India has gone below $ 70 per barrel. The price of Brent crude in the international market has also reached below $ 65. This may directly affect the prices of domestic fuel, which is likely to provide relief to the common man.
Crude oil falling prices: How is India benefiting?
India imports about 87% of its needs. In such a situation, when crude oil prices fall internationally, both India’s oil companies and the government get direct benefit from it. According to a report by Hindustan Times, the average import price of India’s crude oil is now $ 69.39 per barrel, which was $ 89.44 in April last year. That is, a decline of about 22%.
Global economy’s lethargy and impact of trade war
Experts believe that the demand for crude oil is decreasing due to fear of recession and business tensions worldwide. As a result, prices can go down further. Goldman Sachs estimates that by 2025, the average price of Brent crude may be $ 63 per barrel. Along with this, OPEC has also reduced its demand forecast.
Government also took advantage of cheap crude oil
The government took advantage of the cheap rates of crude oil and increased the excise duty on petrol and diesel in April. This step was taken to subsidize LPG cylinder, making the government earned an additional ₹ 32,000 crore. Petroleum Minister Hardeep Puri also said that when the stock of oil companies would come to the level of $ 60-65, then it will be possible to cut the prices of retail fuel.
How long will relief be available?
In March 2024, the government cut the prices of petrol and diesel by ₹ 2 per liter. At that time the price of crude oil was $ 84.49 per barrel, which has now come to $ 69.39 – it is about 17.87%. That is, if this trend continues, then in the coming time, prices may be expected to fall further.
Oil companies’ profits, but customers did not benefit
Currently, oil marketing companies (OMCs) are earning a profit of ₹ 10-12 per liter on petrol and diesel. But despite this, despite the low prices at the international level, customers are not getting full benefit.
IOC (Indian Oil Corporation) reduced the base price of petrol from ₹ 54.84 to ₹ 52.84 on 8 April, but the government increased the excise duty and took the benefit of ₹ 2 itself. For this reason, the price of petrol in Delhi remained ₹ 94.77 and diesel ₹ 87.67 per liter.
Base price cut, but no effect on customers’ pockets
Whenever crude oil prices decrease, it is generally expected that it will directly affect the retail prices of petrol and diesel. But something else was seen in the recent development. Indian Oil reduced the base price of petrol by ₹ 2 – the price reduced from ₹ 54.84 to ₹ 52.84 – The government quietly increased this difference by increasing ₹ 2 per liter excise duty.
This simply means that the customers had no effect on their pockets. This was a clever balance act in which the government got additional revenue and the public did not get relief. It is a bit confusing for the public, as prices are falling internationally, but there is no change at the local level.
Oil companies’ profit margin increased, but why not reduce rates?
Government oil companies such as Indian Oil, Bharat Petroleum and Hindustan Petroleum, are currently earning a profit of ₹ 10-12 per liter on petrol and diesel. This profit margin has increased due to falling crude oil prices and stable retail rates in the international market.
But the question arises that when so much profit is being made, then why the prices of petrol and diesel are not being cut? The answer is that the government allows oil companies to compensate for losses. When the prices hit the sky, the companies suffered heavy losses. Now that the market is in their favor, they are being given a chance to fix their balance sheet.
Government has fiscal space, why did not relieve relief?
The government now has additional revenue facilities, especially when crude oil has become cheaper and a lot of money is being collected by increasing excise duty. But despite this, why is the public not being given relief?
One reason may be that the government is using this extra money to control social schemes, subsidy and fiscal deficit. Schemes like LPG subsidy have been resumed, for which funding is required. Also, in the election year, the government wants to keep its financial situation strong so that the public can benefit in other schemes.
Will the prices of petrol and diesel decrease in the coming months?
Experts believe that if crude oil prices persist or fall at the current level, the oil companies and the government will have a space reducing space. Especially when the under-interest of companies would have been completed and the government will have got fiscal buffer.
Brent crude falls to the range of $ 63-$ 65 is a positive signal. If this trend persists till June-July, the public can get relief of up to ₹ 4-6 per liter. But all this will also depend on the policy and electoral equations of the government.
Customers’ expectations and market pressure
Customers have now become more aware. Through social media and news, people know what is going on in the international market. When they know that the oil has become cheaper but still the prices of petrol and diesel are the same, then resentment increases.
This affects the government and oil companies as pressure. Now the expectation of accountability is more than before, and the government will have to pay attention to it, especially in the electoral atmosphere.
Whatsapp users got a big gift! 6 new features, messaging and calling for iPhone and Android will be even more fun
The post signs of relief in the prices of petrol and diesel: The general public will benefit from the big fall in the price of crude oil? First appeared on News India Live | Breaking India News, The Indian Headline, India Express News, Fast India News.
