“Ardenti Quaestione” means the “Burning Question” which sets fire both on our pocket and heart is when there will be a price relief on Petrol and Diesel. There was a 10% fall price of Crude Oil in the last two months still the fuel price is as high as the sky. The string of Indian’s pocket with respect to oil price is in hands of Geo-Political issues.
How fate is defined?
Here is the brief idea of how the price of Petrol and Diesel is finalized.
An oil-producing nation like UAE exports oil to OMC(Indian Oil, BPCL and HPCL)
Different costs like import charges, transportation charges, port fees etc are incurred.
Finally, when the oil reaches refinery houses, Refinery Transfer Charge is also incurred.
Costs of marketing, commission to the dealers are also included.
Imposing of Excise duty, customs duties and taxes by the government.
All the above-mentioned aspects decide the fate of Fuel price. It may vary from city to city depending on the operations of OMCs of a specific city.
Why the price of petrol and diesel isn’t falling?
The price of crude oil is directly proportional to the price of domestic oil. Thus an increase in the former’s price will increase the later obviously. The question arises why it’s not been lowered while the price of crude oil decreased by $7 a barrel. Here are some of the reasons:
Fall in Indian Rupee
A huge amount of money goes out of the country’s fund in order to import Oil causing a devaluation of Indian Rupee. Yield from Indian bonds will minimize and will repeal FDI making trade unprofitable.
Budget declared on 6th July has imposed taxes which increase the price Rs 2.5/litre.
The motive behind this was to increase government revenue and as well as incrementing usage of e-vehicles.
Shares of OMCs are facing constant losses in the market where IOC is considered to be most vulnerable. This is due to government interference.
US President Donald Trumps’ decision of withdrawal from the Nuclear Treaty with Iran and Slapping sanctions on the country affected Oil supply from Iran. Moreover, US-China Trade War has influenced Oil supply throughout the globe.
To maximize South Arabia’s Economy OPEC had cut down the supply of Oil.
Winner of the Situation
India is dependent on other countries for the import of Oil. Around 80% of crude oil is being imported from other countries like Iraq, Iran, and South Arabia, etc. Exercise duty and taxes imposed by Indian governments did not let the price of domestic fuel to lower. Consumers are habituated to pay high bills thus the government did not bother to reduce the price. Instead, they utilized this opportunity to overcome the deficit. In 2015-2016 government has achieved the revenue of Rs 99,184 crore, in 2016-2017 the revenue touched Rs 2, 42,691 and in 2017-2018 the revenue is Rs 2, 57,850. Insertion of these heavy taxes will fetch the government around ₹28,000 crore revenue.
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