Fuel (Petrol and Diesel) prices have seen a substantial increase over the last one year, each time increasing by a few paise and now, if a comparison is made, Diesel price has risen by 26% over last year.

Udaipur fuel prices meter has obviously also risen with rise in the prices across the country.

The price of Diesel in Udaipur around the same time in 2017 was hovering around the Rs 58 mark, and was at around Rs 64 six months back.  It reached Rs 70 three months ago and today it is at Rs 73.50 give and take a few paise here and there, depending upon the provider.  Petrol prices in the city have also moved in the same direction, going up by approximately 26% over the last year.  This sort of movement in prices is hitting consumer pockets hard and since the government knows the outcome, the prices have moved in paise over the months +/-.

Following chart of the movement in the diesel price in Udaipur indicates how much damage has already been done… (PETROL vs DIESEL) 

One Month Price movement in Petrol and Diesel in Udaipur

Three Month Price movement in Petrol and Diesel in Udaipur

Six Month Price movement in Petrol and Diesel in Udaipur

One Year Price movement in Petrol and Diesel in Udaipur

data courtesy https://www.mypetrolprice.com/225/1/Udaipur-Diesel-Price-Chart

Fuel prices are set to hit all-time highs again, with rising oil prices and the reluctance of the government to cut taxes.  The spike is certain and it is just a matter of time.  The US sanctions on Iran, with President Donald Trump calling for strict compliance has increased the uncertainty in the global oil markets.  Price of crude for India was hovering at $73, with the global benchmark hovering at $75.

Prices are rising gradually, and with the sanctions kicking in, it is expected that the price could touch $100 per barrel and auto fuel could even breach the Rs 100 mark, as per an oil sector analyst.

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A former oil secretary, asking to be anonymous said, “This is insane as the government is letting consumers suffer even though it has pocketed higher revenue from the sector with the understanding that this will come to their rescue when the oil prices fall.  IF this is NOT the right time for an excise duty cut on petrol and diesel, then one fails to understand what would be one.”

With rising inflation and the slowdown in factory output, revenue from the oil sector is the key for center and states. Thus the governments concern over the fiscal is preventing it from including petroleum products under GST.  Oil marketing companies (OMCs) are deliberately holding price lines for days, under government instructions, so as to prevent public backlash.  For e.g. during the Karnataka elections pre May 2018, the OMCs had left prices untouched for a whooping 19 days, which is a record.  However, as soon as the results were out, the daily controlled price hike resumed.

As per another oil sector expert, the need for the government is to take a hit on its oil revenue and cut the excise by Rs 4 instead of a mere Rs 2.  This will hit hard on the government’s revenue, but will save India from a demand squeeze and inflation.  The government has already upped the excise 9 times since it came into power.