State oil companies have raised prices of petrol by Rs 5 per litre and of diesel by nearly Rs 6 per litre in ten weeks, sending rates to record-highs.
Domestic fuel rates appear unstoppable even as international crude oil has stabilised in the last 20 days with prices ranging between $55 and $ 56 per barrel. On Republic Day, oil companies hiked rates of petrol and diesel by 35 paise per litre each. Petrol sold for Rs 86.05 per litre and diesel for Rs 76.23 per litre on Republic Day in Delhi. Petrol and diesel cost Rs 92.62 and Rs 83.03 per litre, respectively, in Mumbai.
Taxes, which the government raised steeply last year, comprise about 60% of the fuels’ retail prices. Rising prices have triggered a strong demand for reduction in taxes on fuels whose sustained high rates can induce inflation in the broader economy.
International crude oil prices have increased around $4 a barrel since the beginning of the year to nearly $56 a barrel on Tuesday. This has led to domestic fuel price hikes.
Domestic fuel retailers are expected to daily revise rates of petrol and diesel after factoring in changes in the international fuel prices and the currency market. But they seem to have abandoned this practice for almost a year, making domestic price patterns harder to comprehend. State oil companies, however, do change prices at varying intervals to keep up with the international market changes and to maintain their margin.