Oil cos go easy with fuel prices ahead of state polls

Oil cos go easy with fuel prices ahead of state polls

NEW DELHI: If petrol price hasn’t risen for over a week, thank the polls in five states. Public sector fuel retailers appeared to be going easy with pump prices on a ‘gentle nudge’ from the Centre, even as benchmark Brent crude on Monday topped $70 per barrel.
Pump prices have remained unchanged for nine days, the longest gap between two revisions since January, even though India’s crude cost has risen nearly 5% from $64/barrel to $67 in step with crude’s sharp rally.
There is no denying that pump prices could still be raised by a few paise in the 19 days before the polls begin on March 27. But the situation is reminiscent of 2018.
After fuel prices spiked to 55-month high ahead of the Karnataka assembly election, government nudged state-run fuel retailers to hold the price line. They did for 19 days from April 24 to May 13, beginning to raise prices two days after voting was over.
Technically, retailers are free to decide prices. But it is common knowledge that the oil ministry can — and does — influence such decisions.
In 2018, the oil company brass had denied any government interference, saying prices were frozen in “public interest”. This time, executives simply refused to talk on the issue.
The Centre’s unease over rising fuel prices is understandable as it has emerged as a poll issue and given the opposition a handle against the BJP.
Petrol price has crossed the psychological barrier of Rs 100 per litre in several cities and towns of Rajasthan and Madhya Pradesh, which have high VAT.
It is in touching distance of the Rs 100-mark in other cities, including Mumbai. Diesel is selling well above Rs 80 a litre across the country, which raises costs for farmers and transporters.
The government had pinned its hopes on a combination of oil producers raising output and waning winter demand to calm the price rally. But those hopes have been dashed and nearly all Wall Street banks have projected oil at $70/barrel by summer and $75 in the third quarter of the calendar year.
If that happens, pressure will mount on the government to cut excise duty, one of the key factors amplifying the impact of high oil prices. It has fended off criticism by shifting the blame on previous governments and Opec+ production cuts.
The Centre had raised excise duty on petrol cumulatively by Rs 13 per litre and diesel by Rs 16 in two tranches on March 16 and May 5 when crude prices collapsed as demand evaporated after Covid-19 shut down economies.

Source From : Times Of India

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