Kolkata: Fuel prices seems to have gone for a longer pause after rising in 22 of the past 26 days as oil marketing companies (OMC) kept the pump prices of petrol and diesel unchanged again on Thursday. Starting from June 7, petrol price has increased by Rs 9.17 and diesel by Rs 11.14 in the national capital. In the other cities the magnitude of increase was similar. But why the petrol and diesel prices were rising everyday?
In 2010, the UPA government decided, on the pretext of pulling government subsidies, to no longer regulate fuel prices. Fuel marketing companies will determine the price based on the price of crude oil per day. Since then, government control over petrol and diesel prices has been lifted. The NDA government led by Prime Minister Narendra Modi came to power in 2014 and upheld that decision.
According to the data, crude oil prices rose the most in 2008. At that time the price of crude oil in the world market was 132 dollar per barrel. But then the price of petrol did not exceed more than Rs 50. According to the data, after the NDA government came to power the price of crude oil imported in June 2014 was 109 dollar per barrel. At that time in Kolkata diesel was Rs 62 per liter, and petrol was Rs 79.
Experts take on the reasons behind the hike in petrol, diesel prices
West Bengal Petrol-Diesel Association Secretary Surjit Cole said, "At the moment the price of crude oil in the world market is around 40 dollar per barrel. During the lockdown, the price of crude oil per barrel was much lower. But even then the price of petrol and diesel has not been reduced in India. Then the price of oil in the international market rose and reached around 40 dollar per barrel. But the price of crude oil in the international market has not increased as much as the price of oil has been rising in this country. So, the price of petrol-diesel is rising because of the rise in the price of crude oil in the international market, this argument is not correct."
How is the price of petrol-diesel determined?
Prominent economist Professor Suman Mukhopadhyay said, " The price of petrol-diesel depends on a number of specific factors. This price is set at 6 o'clock every morning. The price of oil is fixed in the dynamic fuel price method. Because it changes every day. It does not depend only on the price of crude oil in the international market. A few more things also work."
"First, the price of petrol-diesel depends a lot on money and the fluctuation of the dollar price. There is a fight between the Middle East and Russia over the price of crude oil. Which caused a crash in crude oil prices. But that is not always the case. Because countries like America sit around to take advantages of this fight. And that is why most of the time the prices of crude oil has come down a lot. Many ask why then the benefits are not available for us? We have to keep in mind that it only works on 40% of the price of oil in different states. Which is accompanied by excise duty of the central government and VAT of the state government. The central and state taxes are higher than the price of crude oil additional with dealer commission."
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"The demand for petrol-diesel is not as high as it was before the lockdown. That is a big reason for the price increase. With that, the revenue of the central and state governments are absolutely at the bottom. Where will the government collect it? Production units have been shut down. But spending on government social projects and other projects has increased. And that is why additional taxes have been imposed on oil. The same thing is applicable for the European countries that have been severely affected by coronavirus. And that is why there is not much difference in the oil price of our country with those countries. In the meantime, the war situation with China arouse. The central government has to spend on defense too," he added.
Ways to get rid of it?
Mukhopadhyay said, "If GST is imposed on petrol and diesel, the price will come down. But neither the central nor the state governments are interested in that. Because it will reduce the revenue. My advice here is to set aside a time in the day when the lorry drivers or transportation businesses will get oil at a lower rate or some petrol pumps will be specified for them. The government will subsidize there. Second, if the extra money from the foreign exchange get utilized in this sector, the price of oil can go down a lot. If oil prices are not curbed immediately, inflation will rise sharply in the future."
