Petrol Diesel Prices: Why Petrol and Diesel Prices Increased after 4 Months? What Next?

Petrol and Diesel Price: The price of petrol and diesel was hiked by 80 paise per litre and domestic cooking gas LPG price was hiked by Rs 50 per cylinder on March 22, 2022, after a gap of almost four months. The prices of diesel, petrol and cooking gas had been unchanged since October 2021. 

The price of petrol in Delhi has now increased to Rs 96.21 in Delhi and the price of diesel has increased to Rs 87.47 per litre. An LPG cylinder will now cost Rs 949.50 per 14.2kh bottle in the national capital. 

In Mumbai, the petrol price has increased to Rs 110.82 per litre, diesel price to Rs 95 per litre. In Chennai, petrol and diesel prices have increased to Rs 102.16 and Rs 92.19 per litre respectively.

Petrol and Diesel Price in India Chart: Check Fuel Price Hike in Major Cities

Why have petrol and diesel prices increased after 4 months?

The petrol and diesel prices have been increased for the first time in four months, as oil marketing companies (OMCs) raised prices for both petrol and diesel by about Rs 0.8 per litre. The prices of the fuels are expected to increase further as the OMCs have increased the price of bulk diesel by Rs 25 per litre on March 20th, taking the bulk rises above the current prices at retail pumps.

Some of the major oil marketing companies in India include Hindustan Petroleum, Bharat Petroleum and Indian Oil Corporation.

Why have oil marketing companies increased petrol, diesel prices?

The oil marketing companies have increased the prices of petrol and diesel after four months following a sharp increase in the global price of crude oil. The price of Brent crude has risen by 45 percent from $81.6 barrel to $118.5 per barrel. 

Despite such a substantial increase in global crude prices and the fact that India imports almost 85 percent of its crude oil requirements, the fuel price hike remains low in India, as the consumers will have to pay less than 1 percent more at retail pumps. 

International Oil Prices

The International oil prices have come down to below $100 a barrel on March 22, 2022 for the first time since March 1st.

Why have the fuel prices increased after a gap of 4 months and not before?

Usually, the petrol and diesel prices are revised daily with a 15-day rolling average of the global benchmark prices of the petroleum products. However, the oil marketing companies in India kept the fuel prices constant starting from November 4th after the centre announced a cut in excise duty on petroleum products.

The centre announced Rs 5 per litre cut in excise duty on petrol and Rs 10 per litre cut in excise duty on diesel to lessen the impact of high crude oil prices on consumers. Several states also followed by reducing value-added tax on fuel to ease the burden on consumers.

The fuel prices have remained constant since then till the conclusion of State Assembly Elections 2022 in five states including UP, Goa, Manipur, Uttarakhand and Punjab. 
Despite the cut on excise duty, the central excise duty on petrol is still Rs 8 higher than pre-pandemic levels, while excise duty on diesel is still Rs 6 higher than pre-pandemic levels.

Background

The global oil prices are currently at the highest in nearly a decade due to Russia's invasion of Ukraine, which threatens to curb the supply of oil. Russia is one of the major crude oil producers in the world. The United States announced a ban on the import of oil and gas products from Russia on March 8th over its unprovoked military aggression in Ukraine, causing oil price to jump sky high. The oil prices reached a 14-year peak on March 6th when a barrel cost about $139.13, which is the highest since July 2008. 

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