Petrol price rose 26 paise to Rs 83.97 a litre and diesel 25 paise to Rs 74.12 in Delhi as fuel retailers resumed daily revisions after a month’s gap on Wednesday, coinciding with benchmark Brent almost touching $54/barrel, the highest since February 2020.
Petrol is just 3 paise short of its October 4, 2018 record of Rs 84 a litre in Delhi. But diesel is still Rs 1.33 short of the previous record of Rs 75.45 a litre. Prices are bound to rise further as the impact of hardening oil prices deepens in the coming days.
Crude has been on an upswing lately and gained about 5% in the last three days as the OPEC-Plus grouping looked to not increase production. The Saudi offer to cut output by a million barrels, made late on Tuesday, further raised hopes of an early rebalancing of the oil market.
For fuel consumers, though, the high Central excise and VAT are a bigger worry as they amplify the effect of any increase in crude prices. Taxes roughly make up about 60% of the prices.
The Centre had raised excise duty on petrol by Rs 13 per litre and diesel by Rs 16 in two tranches on March 16 and May 5. The revisions had come when consumption had slumped to a record low due to the countrywide lockdown, the government has chosen to persist with it even though fuel sales are nearly back to pre-Covid levels.
No wonder excise duty has emerged as the only positive among major tax heads when the Centre’s tax collection is shrinking. Excise mop up has risen 47% to nearly Rs 2 lakh crore during April-November as fuel sales return to near-normal.
Pump prices remained unchanged during the revisions because oil companies offset the higher taxes against the profit from the historic crash in crude prices as demand tanked when economies around the world shut down. Several state governments, including Delhi, Maharashtra, Karnataka and Punjab also jacked up VAT, which pushes up the net impact of any increase in the base price of fuels.