Fuel prices will likely need to increase by 8 to ₹10 to offset the significant increase in crude oil since the last revision more than three months ago, but this depends on several factors, according to DailyExpertNews sources.
In metro cities, fuel prices remained unchanged on Thursday, March 3, 2022. That is the most extended duration when rates have remained static since the daily price review began in June 2017.
But energy prices have surged during this period on supply concerns from the Russia-Ukraine conflict, with crude oil moving within a $120 radius on Thursday and then retreating to around $114.
The price of crude oil has risen significantly, about 25 percent in that period.
The price revision needed in the retail price of petrol and diesel to offset the rise in crude oil prices during this period is expected to be around 8 to 10 per litre, according to sources told DailyExpertNews.
If the government approves the release of crude oil from its reserve supply, the required increase in retail fuel prices would be reduced. The other option, of course, is to reduce excise and value-added taxes. So the exact amount of increase needed in the sale price of gasoline and diesel would depend on many variables, she added.
The central government had cut excise taxes on November 4, 2021 to ease prices that had reached historically high levels. The government had cut excise duties on petrol by 5 per liter and diesel by ₹10 per litre, causing a sharp drop in fuel prices.
Later in December 2021, the Delhi government had cut the VAT on petrol from 30 percent to 19.40 percent. As a result, petrol prices in the capital fell by NLG 8.56 per litre.
Indian oil companies are expected soon to rely on rising petrol and diesel prices to account for the recent rise in crude oil prices.