Why petrol & diesel prices are on rise?

NEW DELHI :In the national capital, petrol price has risen by Rs 8.50 during the past 17 days to Rs 79.76 per litre as of Monday,While diesel has touched a record high of Rs 79.40, up by Rs 9.90

A RECORD INCREASE

This increase in rates since June 7 is the highest for any fortnight since fuel pricing was deregulated in April 2002.

According to the available pricing data, the maximum that rates have increased in any fortnight was Rs 4-5 per litre.

WHAT IS LEADING TO THE RECENT RISE IN FUEL PRICES?

Petrol and diesel prices depend on some key factors, the primary factor being the prices of global crude oil.

Now, because of the COVID-19 pandemic and lockdowns in various parts of the world, the demand for crude oil had crashed sharply earlier this year, which led to a fall in the global oil prices.

But now the situation has improved considerably in the global market and oil prices are slowly inching back to pre-COVID levels.

Apart from global crude oil prices,

The rupee-dollar exchange rate

The excise duty levied by the central governmentValue added tax (VAT) by state government

TAXES LEVIED ON PETROL AND DIESEL?

Taxes make up for nearly two-thirds of the retail selling price.

As much as Rs 50.69 per litre, in petrol price in Delhi is due to taxes – Rs 32.98 is the central excise duty and Rs 17.71 is local sales tax or VAT.

In diesel, out of the total tax incidence of Rs 49.43 per litre, Rs 31.83 is by way of central exciseand Rs 17.60 is VAT.

The government on March 14 hiked excise duty on petrol and diesel by Rs 3 per litre each.

Then again on May 5 by a record Rs 10 per litre in case of petrol and Rs 13 on diesel.

CURRENT GLOBAL OIL MARKET SITUATION?

The global market scenario has changed over the past couple of months.

With the easing of global lockdowns and reopening of major economies in Europe and the US, the oil demand is slowly recovering.

Separately, the world’s key oil producers earlier this month also extended their record production cut deal till July.

The Organization of the Petroleum Exporting Countries (OPEC), Russia and allies -collectively known as OPEC+ 

Agreed to extend a production cut of nearly 10 million barrels of oil a day through the end of July hoping to boost energy prices.

SHOULD GOVERNMENT HAVE PASSED THE BENEFITS TO CONSUMER?

REVENUE TO THE GOVERNMENT?

Roughly, every rupee hike in excise duty is expected to yield Rs 13,000-14,000 crore annually.

This hike is expected to garner Rs 1.6 lakh crore additional revenue.