What The Media Won’t Tell You About Skyrocketing Fuel Prices

Posted by amit pandey in Business and Economy, Society
September 12, 2017

Oil prices are at a record high again after 2014, and no one is caring about it. Since July, the price of petrol has increased by ₹6.94 and diesel prices have soared by ₹4.73 in Mumbai. But neither is the media concerned nor has any citizen protest has happened against the increasing fuel prices. As per a report on Mediavigil.com dated August 21, 2017, in the last one month, fuel prices have surged at the rate of 12% on average. Adding to this, the report also stated that “In June 2014, the price of Brent crude oil was $115 per barrel, and the price of oil in India was ₹82 per litre. At that time, almost all media houses rampantly criticized the then Congress government. According to this trend, if today, international petrol prices are hiked to what they were in 2014, then Indian petrol prices will surge to ₹150 per litre.

As per Indian Oil Corporation’s website, in Delhi, the price of petrol (per litre) on July 10, 2017, was ₹63.83 which increased to ₹70.17 on September 10. This trend is similar in other metropolitan cities too. On July 10, 2017, petrol prices in Kolkata, Mumbai, and Chennai were ₹66.73, ₹75.04, and ₹66.25 respectively. On September 10, the prices increased to ₹72.91, ₹79.28, and ₹72.73 respectively. Chennai suffered the highest leap, at ₹6.48 per litre.

So the big question that emerges from these stats is – why are we profiting despite decreasing international fuel prices? The primary reason behind this is the increase in excise duty by the government to increase its revenue collection. In November 2015 and January 2016, excise duty was increased by a factor of five each time, thus nullifying the positive effects of plummeting international fuel prices.

Factly.in calculated how much tax a customer pays on fuel. The petrol price charged to dealers is ₹30.42, on which the dealer adds ₹3.42 as commission. The central excise duty (₹21.48 ) and state VAT (₹14.89) is added to this, making the fuel price go up to ₹70.43. This shows that we are paying 51.6% of petrol prices as tax. Similarly, the government is levying 44.6% of the total cost as tax on diesel.

The daily fuel revision policy, which was introduced on 16th June, is another big reason why this surge did not come into anyone’s attention. Under this policy, fuel prices would officially be revised (read increased) daily at 10 PM. Another thing that needs to be acknowledged is that this surge will also affect our daily household items like fruits and vegetables.

Why the government is silent on this is also a question that needs to be asked. The BJP, which vociferously criticized the UPA in the past, is now behaving like an ostrich. The truth is that after the implementation of the fuel revision policy, all autonomy to regulate fuel prices has been placed in the hands of private oil companies. Once upon a time, price regulation was done by government oil companies. Since then, oil prices have been deregulated. Private retailers like Reliance Industries and Essar have also decided to revise their prices daily. These oil companies are proteges of PM Narendra Modi, and hence there is no one to question their increases in fuel prices.The ramifications of this privatization will affect the government oil companies in the future, just like what happened with telecom authority BSNL.

Youth Ki Awaaz is an open platform where anybody can publish. This post does not necessarily represent the platform's views and opinions.