Comments
A piece of news that attracted attention last month was when the Minister for Petroleum and Natural Gas, Hardeep Singh Puri, was quoted as saying that the public sector oil marketing companies (OMCs) may take a call on fuel prices if crude oil rates stayed stable. The Minister seemed to be indicating, according to the reports, that the oil retailers would be in a position to look at the issue if international prices remained stable and the companies had a good next quarter.
Theoretically, oil retail pricing is deregulated in India, but the reality is something else. The government of the day does artificially manage the pricing by sending informal instructions to the oil companies. India’s oil retail market is mostly dominated by public sector undertakings — Indian Oil Corporation, Hindustan Petroleum Corporation, and Bharat Petroleum Corporation — with Indian Oil Corporation being the key player. There are private sector players too.
As on April 2023, the number of PSU retail outlets in India was
Indian Oil: 36,285
Bharat Petroleum Corporation: 21,029
Hindustan Petroleum Corporaiton: 21,186
The price at which Indian refiners bought their crude oil (Indian Basket) in April 2023–24 averaged $83.76 a barrel; it cruised around $74.9 a barrel in May and June; and in July till now, it has averaged $76.62 a barrel.
But despite the price of crude imports moving down, retail selling prices for petrol and diesel have been frozen for more than 13 months now. And to add to this, the governments, both at the Centre and the States, play around with local taxes and levies. Petrol and diesel are still out of GST rates.
Where does all this leave the consumer?
The high fuel costs definitely dent the consumer’s pocket. And with some States going to the polls in the coming months, no one would touch fuel prices, as they do impact the vote bank. Even if lower prices benefit are passed on to the consumers, there is also a situation when the governments, both at the Centre and the States, tweak the tax components, thus making little or no difference to the consumer’s pocket.
OMCs, according to experts, are supposed to compute moving average prices based on prices in the previous fortnight, considering the exchange rate. Those tracking the sector say now they are making a good margin and probably creating a buffer in case crude prices move up during election time.
According to some, the government is doing a balancing act behind the scenes while taking the official position that OMCs are free to fix petrol and diesel prices!
Read: How do crude price movements impact rupee, stock market?
(Visualisations by AJ Vinayak)
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.