Fuel prices up after 82 days as higher duty, crude rebound begin to bite

NEW DELHI: State-run retailers raised petrol and diesel prices by 60 paise each on Sunday, resuming daily price revision after 82 days as absorbing two rounds of hike in Central fuel taxes and a rebound in international benchmark prices squeezed their margins dry.
In Delhi, petrol price went up to Rs 71.86 per litre from Rs 71.26, while diesel price increased to Rs 69.99 per litre from Rs 69.39. In Mumbai, petrol sold at Rs 78.91 per litre and diesel Rs 68.79.
The retailers had held the price line for petrol and diesel since March 16, a day after the Centre raised excise duty by Rs 3 per litre. Again on May 6, Central levies were raised by Rs 10 per litre on petrol and Rs 13 per litre on diesel. The same day, the Delhi government raised VAT by Rs 7 per litre to mop up funds for Corona measures.
On both those occasions, the state-run oil marketing companies offset the higher Central taxes against their margins that had widened to double digits as global crude prices collapsed. But increases in Vat affected by several state governments was immediately passed on to consumers by way of higher pump prices. On May 5, the Delhi government raised VAT, which made petrol costlier by Rs 1.67 a litre and diesel by Rs 7.10 – the highest-ever increase in the price of any fuel.
In contrast to petrol and diesel, the state-run retailers continued to revise jet fuel prices to extend the “benefit” of sliding oil prices to airlines, though only a few flights carrying medical equipment or cargo took to the sky. But in case of motor fuels, company executives said daily price revision did not make sense when benchmark prices were “unrealistic” and sales had slumped 70% due to the countrywide lockdown.
Oil prices began sliding since February and dipped to 21-year low to $16/barrel as the coronavirus pandemic severely curtailed practically all economic activities around the world. The prices have now recovered to $40/barrel level.