Petrol prices in India are on the rise, but unlike earlier, there has been no fuss around the increase in price this time. Petrol prices have risen by almost Rs 6 per litre since June 16.
The Modi government introduced dynamic fuel pricing in June 16 for revising retail fuel prices daily across the nation in conjunction with the change in the crude oil prices.
The supply cuts by Organization of Petroleum Exporting Countries (OPEC), is the primary reason why retail prices of petrol are moving up.
Prices of crude oil have fallen by as much as two-thirds in the last nine years, but the retail price of petrol has risen by a half during the same period, The Financial Express reported.
Since July 2008, the Indian basket of crude oil has fallen by 65 percent, from $132.47 per barrel to $46.56 per barrel in June 2017, data from the Petroleum Planning and Analysis Cell (PPAC) revealed.
In a strange way, during the same period, retail petrol prices in the four metro cities of Delhi, Mumbai, Kolkata and Chennai increased by approximately Rs 22 per litre of petrol or over 43 percent.
Deregulating petrol
The union government used to control petrol prices till 2010. Through deregulation, the government allowed oil refining and marketing companies to set prices in line with market dynamics, especially the Brent prices. After the move, prices of petrol rose and dipped in line with rise and fall in crude oil prices till early 2013.
But soon after, crude oil prices began falling, while petrol prices kept increasing, or maintained steady pricing. Strengthening of the rupee against the US dollar also played a role, with rupee value up 6.3 percent so far this year. This means expenses of oil downstream companies went down as per dollar spending on buying crude oil decreased.
Dynamic pricing
With the introduction of dynamic pricing, there has been an immediate price cuts in petrol prices. Price fell by Rs 3.45 per litre in just a span of 13 days.
Prices of petrol and diesel have been revised at 0600 hrs everyday since June 16. Rates during the first fortnight dropped but have been on the rise since July 3.
Thereafter, retail petrol prices have been on the upswing, with oil companies continuously raising it every day in small instalments. Since June 28, petrol prices in Delhi have risen by Rs 5.63 per litre to Rs 69.09 per litre as on August 28.
On a daily basis, the rise in petrol prices is insignificant, which is why most of us pay heed to it. But if an analysis is done, it clearly shows how petrol prices shot up since dynamic pricing were introduced.
