Diesel Prices Reach All-Time High; Four-Year High for Petrol

Henrietta Brewer
April 2, 2018

The uptrend in the retail fuel market is likely to put pressure on the government to prune taxes, which account for almost half the price of petrol and diesel.

Petrol prices hit a four-year high on the first Monday of the new financial year at Rs 73.83 per litre, while diesel reached an all-time high at Rs 64.69 per litre.

According to media reports, petrol in New Delhi now costs Rs73.73 a litre, the highest since September 14, 2014 when rates had hit Rs76.06 a litre. There are complaints that many drivers are levying a high charge after the increase in diesel prices.

After slashing excise duty last October, the Centre had asked states to also lower Value-Added Tax, but only Maharashtra, Gujarat, Madhya Pradesh and Himachal Pradesh acted on its call.

By December 1, 2017, the price increased to Rs 73.24 and Rs 63.40 respectively. To arrive at retail prices, companies add their marketing margin, dealers' commission and government duties to refinery gate prices that are equal to global rates of petrol and diesel.

Revenue boost: The hike in duty helped government's excise mop up more than double to Rs 242,000 crore in 2016-17 from Rs99,000 crore in 2014-15.

The fuel prices started increasing from 2017. He also abolished Rs 6 per litre additional duty of excise on both the transport fuel.

In June 2017, State-owned oil companies Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation adopted a daily price revision system to instantly reflect changes in cost.

The government has reduced the price of petrol by Rs2.07 and diesel by Rs2 per litre. As India is mostly dependent on imports for its oil needs, the 47 percent recovery in the price of crude oil has led to a 88 billion dollar import bill.

Also between November, 2014 and Jan, 2016 when global crude prices were falling, Centre raised excise duty on fuel 9 times to take away gains arising from plummeting global oil prices.

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