(FE)
With oil turning costlier relentlessly — Brent crude went past $80 a barrel on Thursday, up 3.3% from a week ago and a three-and-half-year high, taking the cost of Indian basket to a prohibitive $76 a barrel — and the rupee losing value against the dollar, consumers should brace for more hikes in auto fuel prices. After a 19-day reprieve to consumers owing to assembly elections in Karnataka, oil marketing companies (OMCs) had increased petrol and diesel prices on Monday. Since then, prices have been going up on a daily basis.
It is estimated that every $1 increase in crude price demands an increase of around 63 paise per litre in the prices of both diesel and petrol, and a Rs 1 depreciation against the dollar requires a 50 paise increase in the prices of these fuels. While 47% of petrol prices comprises excise duty and value-added tax, the figure stands at around 40% for diesel. So far, the Centre and states have shown no inclination to cut the taxes. Morgan Stanley expects Brent to hit $90 a barrel in 2020.
For several months continuously, except for major election seasons, OMCs have been revising petrol and diesel prices on a daily basis depending on the rolling 15-day petroleum product prices in the international market. Brent crude price is now at its highest since November 2014.
