With this, petrol costs Rs 101.01 per litre in Delhi, while in Mumbai its priced at a whopping Rs 115.88 per litre and in Kolkata at Rs 110.52. In Chennai, petrol costs Rs 106.69 per litre.
Diesel rates have also shot up to Rs 92.27 per litre in Delhi. It is priced at Rs at Rs 100.10 a litre in Mumbai, Rs 96.76 in Chennai and Rs 95.42 in Kolkata.
Even though there is uniform rise in prices of petrol and diesel across the states by oil marketing companies (OMCs), the final rates vary, depending upon incidence of taxation in a particular state.
At Rs 117.83 per litre, Ganganagar district in Rajasthan has the highest rate of petrol. Diesel here is priced at Rs 100.61 per litre.
9 days = Fuel dearer by Rs 5.60 per litre
Fuel prices were hiked on March 22 after a gap of 137 days. The total hike till now has resulted in about 1 per cent rise in prices for consumers.
If we calculate the price rise from March 22, it comes out to be Rs 5.60 per litre. This is the highest hike in any 9-day time period since daily price revisions were implemented in June 2017.
In the first four days of hike, prices jumped by 80 paise each day. Thereafter, prices were hiked by 50 paise, 30 paise, 80 paise, 80 paise on the sixth, seventh, eighth and ninth day, respectively. This takes the total rise per litre to Rs 5.60.
Hence, consumers now pay nearly Rs 6 more than they used to for a litre of petrol before prices were hiked.
Similarly, diesel rates were hiked by 80 paise for the first four days, thereafter it was raised by 55 paise, 35 paise and 70 paise and 80 paise subsequently – taking the total hike to Rs 5.60 per litre.
LPG cylinder cost at record high
Along with pump prices, the cost of non-subsidised LPG cylinder or cooking gas was also hiked by Rs 50, after a hiatus of 167 days.
A 14.2 kg cylinder in Delhi now costs Rs 949.50, while in Kolkata it costs Rs 976. This is an increase of almost 16 per cent since March 1, 2021 when a 14.2 kg liquified petroleum gas (LPG) cylinder costs Rs 819 in the national capital.
LPG prices are now at record highs and the consumers will need to bear the entire brunt of it since subsidies were removed in May 2020.
In terms of per kg, the cost for consumers has jumped from Rs 57.67 on March 1 last year to Rs 66.86 now. With today’s hike, cooking gas prices have gone up by Rs 140.5 per 14.2 kg. It had remained unchanged since October 2021, after rising sharply by almost Rs 100 for 4 months.
A 5 kg LPG cylinder will now cost Rs 349, while the 10 kg composite bottle will come for Rs 669. The 19-kg commercial cylinder now costs Rs 2,003.50.
What led to the rise
International oil prices started soaring even before Russia’s invasion of Ukraine on February 24. In fact, the war led to a surge in prices at a much faster pace.
Even though India imported only 1 per cent of its crude oil requirements from Russia in 2021, the war did have its impact on global prices, thereby impacting India as well.
Russia being the sixth largest economy of the world is a major producer of certain essential commodities. Of this, it produces 17 per cent of the world’s natural gas and 12 per cent of the global oil needs.
The war led to shut down of various shipping lanes in the Black sea — an important trade route — and posed a further cause of concern for traders, who were trying to recover from pandemic-induced shocks.
In addition, sanctions imposed by the United States, European Union and the United Kingdom further added fuel to the fire, making traders jittery about price hikes across segments.
Impact was also felt on stock exchanges with markets crashing across countries as investors dumped risky assets for safer ones. So, volatility was at its peak across all sectors amid war-led uncertainties.
Consequently, Brent crude prices soared past $100 a barrel for the first time after 2014. On March 9, international prices touched $140 a barrel — its highest level till date.
However, prices have now cooled as talks progressed between Russia and Ukraine to end their weeks-long conflict. Brent crude is now at $110 per barrel.
How it impacted India
Speculations were rife that OMCs will start raising fuel prices once elections in 5 states are over. However, they were eventually raised after a good 12 days after the declaration of results.
OMCs had stopped raising prices in November 2021 after the Centre reduced excise duty on petrol by Rs 5 and by Rs 10 on diesel.
India is 85 per cent dependent on imports for meeting its oil needs and so retail rates adjust accordingly to the global movement.
On February 24, when Russia invaded Ukraine, the basket of crude oil that India buys averaged $100.71 per barrel as compared to $82 in early November last year when prices were stalled.
Even when crude touched $140 a barrel on March 9, the Indian basket of crude oil was at $128.24 per barrel, yet fuel prices were kept unchanged.
Interestingly, OMCs started raising prices from March 22 when the price of Indian basket of crude was somewhere around $108 per barrel (as of March 18). It had hit a peak of $130 on March 7 when Brent was at $139 per barrel.
As of March 29, the Indian basket of crude oil stands at $112.41 per barrel, according to Petroleum Planning and Analysis Cell (PPAC).
The Indian crude oil basket is mainly derived from a basket comprising sour grade (Oman and Dubai average) and Sweet grade (Brent Dated) of crude oil processed in refineries in the ratio 75.62:24:38 during 2019-20.
In other words, it is an indicator of the price of crude oil imported in India.
An interesting point to note here is that the OMCs started raising fuel prices once the price of the Indian basket cooled to $108. When prices were soaring to record highs of $130, fuel rates remained stagnant.
More hikes to follow?
The retailers are raising prices to bridge under-recoveries on petrol and diesel that are estimated to have risen to Rs 20-22 when global benchmark oil, Brent, hit $139 per barrel on March 7.
The prices are likely to rise further as oil’s slide to $110 per barrel levels and the seven rate revisions bridges very little of those under-recoveries.
Moody’s Investors Service recently said the three major retailers – IndianOil, Bharat Petroleum and Hindustan Petroleum – lost more than $2 billion, or Rs 19,000 crore, for holding pump prices for 137 days since November in spite of a spike in global oil prices.
While Kotak Securities believes that OMCs “will need to raise diesel prices by Rs 13.1-24.9 per litre and Rs 10.6-22.3 a litre on gasoline (petrol) at an underlying crude price of $100-120 per barrel.”
Crisil Research said a Rs 9-12 per litre increase in retail price will be required for a full pass-through of an average $100 per barrel crude oil and Rs 15-20 a litre hike if the average crude oil price rises to $110-120.
What finance minister said
Finance minister Nirmala Sitharaman defended the 137-day hiatus in fuel price revision, saying the disruption in supply chains and the resultant increase in global oil prices due to the war in Ukraine was a “couple of weeks” phenomenon resulting in the record hike in petrol and diesel prices in last 8 days.
Replying to a debate on the Budget for 2022-23 in Rajya Sabha, she said opposition members had stated that the war in Ukraine had been raging for a long time and fuel prices are being raised now.
“Absolutely untrue,” she said. “The disruption and a resultant increase in the price of global oil and also disruption to supply are all happening since a couple of weeks ago and we are responding to it.”
Sitharaman said the government is taking various steps in response to the rise in global oil prices.
(With inputs from agencies)