Petrol, Diesel Prices Rise Again For Sixth Straight Day! What Are The New Rates & Why The Hike? | EXPLAINED

The current hike in fuel prices is primarily due to the hike in excise duty by a record ₹10 per litre on petrol and ₹13 per litre on diesel. Earlier, the companies absorbed the raise and didn’t pass on the impact to consumers even as crude oil prices were at record low levels.

Petrol and diesel prices have been raised for sixth straight day as state-run oil firms hiked petrol price by 57 paise a litre and diesel price by 59 paise a litre on Friday (Getty Images)

New Delhi: With the unlocking of the economy, petrol and diesel prices have been raised for sixth straight day as state-run oil firms hiked petrol price by 57 paise a litre and diesel price by 59 paise a litre on Friday. The petrol price has been increased by ₹3.31 a litre and that of diesel by ₹3.42 a litre in just the last six days. Although in the global market, brent crude is inching towards its first weekly decline in seven weeks. The international benchmark has so far dropped 12 per cent this week and trading 3 per cent down at $37.40 a barrel, according to the news daily Mint. You may wonder the reason behind the successive sixth-day rise in fuel prices by oil and marketing companies despite the fall in global crude prices. How are the prices determined? The prices have been increased under the dynamic pricing system, which OMCs resumed after over the 80-day break during the lockdown period. State-run fuel retailers, which decide the new pricing on an daily basis, considers a fortnightly average of the international benchmark rate of petrol and diesel. The complex formula also takes into account the exchange rate of the US dollar and rupee. The value of the rupee is crucial as India imports around 80 per cent of its crude oil requirements. In India, retail fuel prices are linked to the price of these fuels in global markets, not that of crude oil only. As a result, the state of demand-supply of finished products in global markets impacts the retail price of auto fuel. Having said that crude oil, accounts for about 90 per cent of the cost of these refinery products and remains the biggest factor of retail fuel price. What led to OMCs rising fuel prices? The current hike in fuel prices is primarily due to the hike in excise duty by a record ₹10 per litre on petrol and ₹13 per litre on diesel. Earlier, the companies absorbed the raise and didn’t pass on the impact to consumers even as crude oil prices were at record low levels. The retail price of petrol also depends on the cost of the Indian basket of crude, which is the average of Oman, Dubai and Brent crude. According to the latest data, petrol and diesel sales have gone up 81.8 per cent and 69.1 per cent, respectively, in May from April as economic activities resume after the nationwide lockdown. Since March, the central government has raised excise duty twice on both the fuels along with the states increasing cess or VAT. It means that almost 70 per cent of the retail price of petrol and diesel is because of the tax component. Raising retail prices became important for the OMCs now because it had substantially brought down its marketing margins from a record high level of Rs 12-18 per litre, according to the news agency IANS. In case the companies don't raise the prices it may start incurring losses. Here are the current fuel prices in major cities. New Delhi: Petrol ₹74.57 Diesel ₹72.81 Gurgaon: Petrol ₹73.75. Diesel ₹65.82 Mumbai: Petrol ₹81.53. Diesel ₹71.48 Chennai: Petrol ₹78.47. Diesel ₹71.14 Hyderabad: Petrol ₹77.41. Diesel ₹71.16 Bengaluru: Petrol ₹76.98. Diesel ₹69.22 Watch: Fuel price hike burden pockets once again