Can fuel prices touch Rupees 100 soon?
Petrol and Diesel prices are on a rising spree since last few days. So today we analyse the reasons of this increase along with possible solution to arrest their further increase.
COVID-19 turned our lives upside down and we were forced to stay at homes only. All travel plans went for a toss. Then almost after a year came the respite through vaccines and we were all set to going back to our glorious days of roaming around in bikes and cars. But then appeared another spoil sport in our plans – FUEL!
The prices of fuel have been rising constantly and on Thursday they formed yet another record high with Petrol prices hiked by 25 paise a liter and diesel by 30 paise a liter. Prices in Mumbai and Chennai are already above 90 per litre for petrol and other cities are following the suite wherein if we see a century of price coming in, it will not be surprising. However, the bigger question which arises is why exactly are the fuel prices on a rampant spree?
So, the biggest reason for this is increase in the International Crude Oil prices. In June’17, Government of India adopted the dynamic fuel price policy. This means however big or small price change happens in international crude oil, the Indian oil marketing companies are free to pass on that to the retailers. Due to the COVID lockdown, the regulations of dynamic pricing were removed for 2 months but guess what – the Crude prices were at an all-time low during that phase. So, the government saw that as an opportunity to meet its increased expenses by increasing taxes on the fuel price and it proved to be a boon for it.
However, the world started to see recovery slowly from the pandemic with the demand of fuel constantly rising and along with that started the rise of crude oil prices. With India importing 84% of its oil need, a small rise also is enough to give shockers to the consumers. The world anticipated that major oil producers like Russia and the Arabic world would increase the oil production to match the rising demand, but that didn’t happen either and since October’20, the crude oil prices in the International market have risen by more than 50% crossing $60 per barrel this week.
What can put the brakes to these rising fuel prices? It’s only possible if the Government agrees to decrease the taxes on the fuel. Since Fuel is out of the GST regime, hence there’s no upper limit to the taxes applicable on it, therefore, today almost 63% of the price of petrol and 60% of the price of diesel is composed of taxes (Excise Duty and VAT). That’s exorbitant! And if anytime soon the Government doesn’t go for an Excise Duty Cut which currently stands at INR 32.9 per litre on petrol and INR 31.8 per litre for diesel, we’ll see the most unwanted century in the petrol prices.
This brings us to our last pondering that why are people so concerned about fuel prices? The reason is because increase in fuel prices have a spiraling effect on inflation. It’s not only for buying petrol or diesel you’ll have to shell out more money, but also for all essential goods like your staples, clothing etc. because at the end of the day it’s the transport service which brings all goods & services to you and that runs on fuel.
We’ll never wish that we get to see the century levels of fuel prices in future, however, there’s another century which we complete today and are really proud of i.e. 100 days of inception of Finns&Marks. Thanks for all your love and support towards this initiative of ours which has kept our spirits high and we wish that your love for our content keeps on growing making us touch newer milestones.
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By: Anmol Gupta | Isha Garg