OILY MESS

A sharp increase in global crude oil prices has pushed retail rates of petrol and diesel to historic highs. Taxes are partly to be blamed, but reducing excise duties may not be easy for a cash-strapped government

- SUMANT BANERJI

On January 19, Minister for Petroleum and Natural Gas Dharmendra Pradhan came down heavily on oil-producing countries for going slow in ramping up supplies and artificially inflating global crude prices. “A few months back we were discussing about consumption-centric economic revival, demand revival, and we are supposed to restrict our production cuts and gradually ramp up production by January — but in contradiction to that, we are now controlling oil production,” Pradhan said at an energy conference organised by the Atlantic Council. India is the third-largest consumer of energy in the world and imports 85 per cent of its crude requirement every year. Prices of the Indian crude basket have gone up from $40.66 per barrel in October to a shade under $70 per barrel today, a rise of nearly 68 per cent within six months. High oil prices have a debilitating impact on the country’s fiscal maths.

Petrol Hits A Century

Retail prices of petrol and diesel have mirrored the trend. Since October, petrol and diesel prices have gone up by over ₹10 per litre in Delhi and are at their all-time highs. It is much worse in other parts. In mid-February, petrol prices crossed the psychological ₹100-per-litre mark in Rajasthan’s Sriganganagar district. Since then, the barrier has been breached in over two dozen districts — mostly in the states of Rajasthan and Madhya Pradesh. Even in Mumbai, a litre of petrol costs a high ₹97.19 (as on March 25).