Soaring fuel prices to sharpen House panel focus on taxes

High taxes on petrol and diesel are likely to be in focus when Parliament’s standing committee on petroleum dissect the fuel pricing policy on Thursday amid soaring pump prices.

Fuel prices have climbed up consistently this year as India’s crude purchase cost increased from about $55/barrel in January to $72.18, or 27%, on Monday. This is set to rise further as international benchmark Brent crude topped $72/barrel on Tuesday and is seen hitting $80 in the coming months.

Price revisions since January have pushed petrol price beyond Rs 100 in seven states. It is nearing the mark in other states. Diesel has hit a century in Sri Ganganagar district of Rajasthan and rising towards Rs 90 a litre in other states.

Crude cost is a factor in the pricing of fuels. Petrol and diesel prices are set according to their international quotes and the rupee-dollar exchange rate. The taxes make all the difference at the pump as they amplify the impact of oil companies raising dealer price.

The dealer price of petrol in Delhi, considered the reference market, has risen by Rs 7.49 from Rs 28.50 a litre in January to Rs 35.99 but the pump price has risen by Rs 12.70 a litre on January 1 to Rs 96.41 on Tuesday.