States Elections Over: Petrol, Diesel Price May Rise By ₹10- 30 per litre!

Ongoing war between Russia and Ukraine, as well as the lack of fresh supplies, have pushed crude oil price to a 14-year high of $127 per barrel on Monday, 7th March 2022. Oil prices have been on the boil ever since Russia puts its forces on the Ukraine border last month.

Worryingly, the global hike in the crude oil prices led by the Russia-Ukraine crisis is expected to push India’s domestic prices of petrol and diesel. The crisis as well as fears of lower supplies along with robust global demand pushed the Brent-indexed crude oil price higher. Lately, crude oil prices have surged by nearly 20% in the last three days due to fear of tight supplies. At present, Russia is the third largest producer of crude oil in the world. It is feared that new and more stringent sanctions against Russia will curtail global supplies and stifle global growth. Conversely, India is a major crude oil importer, and for it, the price range is a cause of concern as it may add ₹ 10-30 to petrol and diesel selling price if the Oil Marketing Companies (OMCs) decide to revise the current rates. The country imports 85 per cent of its crude oil needs.

On March 7, the WTI indexed crude oil prices rose to over $126 per barrel. It had increased to $103 per barrel on March 1, 2022 from $95.72 per barrel mark on February 28. The price of petroleum products in the country depends on international oil rates and international oil rates increased still petrol prices in major cities of India is not changed. It shows how the Government of India controls the petroleum price to win state elections. The petrol price is almost constant in all major cities of India.  It is widely expected that the OMCs will revise the current prices on or after March 7, which is the last day of voting in the ongoing state assembly elections. However, an excise duty cut may dampen the impact on petrol and diesel prices to an extent, but not entirely.

Besides, the cascading effect of higher fuel cost will trigger a general inflationary trend. Already, India's main inflation gauge -- Consumer Price Index (CPI) -- which denotes retail inflation, has crossed the target range of the Reserve Bank of India in January 2022. The government of India and leaders of the ruling party will justify the increase in a news debate, but the biggest question is how common citizens of India will survive in an inflation?