Petrol, Diesel Price Rise- 15 Days 15 Hikes

Jet Set Go?

Only two things are progressing exponentially in the country today, one is the graph of Corona cases, and the other is the fuel prices. The double whammy of rising fuel prices and economic distress caused by the pandemic has burdened the lower and middle classes. So the question arises, are the fuel price hikes inevitable? Does the government have no choice left but to increase the fuel prices? Unfortunately, the answer to both questions is an overwhelming “NO”. Comparing the international crude oil prices through global oil benchmarks - Brent, OPEC or WTI- one cannot help but feel sorry for oneself as a consumer.  

 A cursory glance at the below table makes it abundantly clear that the end consumer like you and I have suffered the most. Just compare the two dates- 21 June and 06 Jan- of the year. 

Date	Petrol Price (Uttrakhand in₹)	Diesel (Uttrakhand in ₹)	Global Brent Crude Oil (in  $/Barrel)	Global OPEC (in $/Barrel)
21 June	80.69	71.00	39.72	35.09
11 May	74.57	64.18	29.63	22.71
28 April	72.55	63.17	20.46	12.41
07 April	72.55	63.17	22.67	31.87
06 Jan	77.31	69.18	68.44	68.89

A 42% drop in global crude prices hasn’t resulted in the same corresponding decrease in domestic fuel prices. In fact, since January, fuel prices have stayed put even as global crude prices fell to historical lows. So, are the Oil Marketing Companies (OMCs) raking in the moolah? Surprisingly, No. One important dimension to explore in this case is that the Government deregulated state control of petrol prices in 2010 and diesel prices in 2014. But the harsh reality is that whenever the prices fell in the global markets this Government has disingenuously increased excise duty thereby nullifying the benefits of any decrease in prices to the end consumer. In fact, since 2014 the excise duty has increased by a whopping 258% on petrol and 820% in diesel. The only coffers that have filled are the Governments. The poor middle class has taken the brunt of high fuel prices-both directly and indirectly. Indirectly through a rise in prices of commodities which are primarily transported by diesel consuming vehicles like trucks and directly through the purchase of petrol or diesel from pumps for personal transportation needs. One estimate puts the Government’s earnings through excise alone in the last 6 years at a monumental ₹ 18,00,000 crores.

As per IOCL website data, Price build-up of petrol at Delhi as on 16.06.2020 puts the total taxes at a staggering 225% of the fuel price. This figure is unacceptable and, to put it more bluntly, is like rubbing salt in the wound except that the wound also has been inflicted by the Government.

A barrage of questions arises, when the Government raked in such a humongous amount of money why did it appeal for charity one month into the COVID crisis? Did the Government deploy the generated resources into productive schemes or to build the much-needed infrastructure in the country? Don’t the middle class deserve some form of Income Support Scheme from the government during this unprecedented financial crisis?

Even when a father lends money to his son for business there is the expectation of handsome returns, so is it wrong for the common man, like you and I, to expect the Government to start giving us handsome returns for our investment?

Numerous questions arise but the Government has no answers. Meanwhile, the fuel prices have been hiked for the 15th consecutive day (as on 21st June). The bottom line is, the high fuel price regime is here to stay, whether we like it or not. Embrace it. Grow your vegetables and start training bulls, for you may require them for your bullock carts.  

As Thomas Paine once put it, “Government, even in its best state, is but a necessary evil; in its worst state, an intolerable one.”

-Sunny Gusain

*Views expressed are personal. If I offend you, please stay away.