Who puts the pocket on every liter of gasoline and diesel

A return of crude oil, combined with taxes that represent more than the base price, means that petrol and diesel are the most expensive in the last two years.

Oil retailers have been raising prices since November 20, after a two-month break. This came as crude oil rose to more than $ 50 a barrel, gaining 19 percent in the last month.

However, 30-40% of the retail price is related to Brent crude oil. The total volume of consumer payments at the refueling station includes central and state taxes and other taxes.

For example, petrol and diesel in Delhi cost Rs 83.71 and Rs 73.87 per liter, respectively, on 14 December 2020. This is the highest since September 2018. Those prices as of 1 December, the most recent data for which separation is available, it was Rs 82.34 and Rs 72.42 a liter.

According to the separation available on the Indian Oil Corp. website, taxes contribute more than 63% of gasoline and 58.6% of the retail price of diesel.

High taxes have prevented retail prices from falling as grossly, even as prices are tied to the market in India. Brent fell to $ 19 a barrel in April, from $ 66 in early 2020, as the Covid-19 blockages triggered economic uncertainty and demand fell. Instead of passing on the benefit to consumers, the government has increased central excise duties on gasoline and diesel twice – 10 and 13 rupees per liter – in May.

The increase helped the government’s excise revenue grow to Rs 1.61 lakh between April and October 2020, up 40.9% year-on-year, according to the Comptroller General. Then government tax revenues declined as the economy contracted. Central taxes are higher than the base price of crude oil on 1 December.

Oil retailers need to earn

For oil trading companies, a return to Brent crude oil will create stock gains in the third quarter – by selling purchased inventory at a lower price to a higher market price. According to an ICICI Securities report, further price increases are needed to maintain net marketing margins and offset the weak gross refining margin. Brokerage estimates inventory earnings at $ 450-880 million in the third quarter.

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