Petrol-diesel prices will increase: Crude oil prices reach the highest level in 7 years, petrol-diesel may be costlier by Rs 3

The common man may get another setback amid rising inflation. Petrol-diesel may become more expensive in the coming days because the price of crude oil has reached a high level of 7 years. In the international market, the price of crude oil has crossed $ 87 per barrel. Earlier in January 2014, the price of crude oil had crossed $87.

On December 1, 2021, the price of crude oil was $ 68.87 per barrel, which has now reached above $ 86 per barrel. That is, within a month and a half, the prices of crude oil have increased by 26%.

Anuj Gupta, Vice President (Commodity & Currency), IIFL Securities says that in the coming time, the price of crude oil in the international market can go up to $ 90 per barrel. Due to this, the prices of petrol and diesel may increase by 2 to 3 rupees in the next one month.

Why is crude oil getting expensive?

The world is battling with the Corona crisis. Apart from this, there is an atmosphere of tension in the Middle East as well. A drone strike at an airport in the United Arab Emirates on Monday sparked a new crisis that is expected to hit oil production. Market experts say that these events will have an impact on the production and demand of crude oil, due to which its prices are bound to rise.

Relief from expensive petrol and diesel in elections

According to experts, the government may deny its role in setting the price of petrol and diesel, but in the past years, it has been seen that during the elections, the government does not increase the price of petrol and diesel to please the public. The trend of the last years is telling that in the election season, the public has got relief from the increased prices of petrol and diesel.

The government budget may deteriorate

According to estimates, if the price of crude oil increases by $10 a barrel, it increases the fiscal deficit by 10 basis points.

This also increases inflation, which will make it difficult for the RBI to keep the interest rates reasonable.

Due to the increase in export bills, the dollar reserve will decrease, which will weaken the rupee.

On November 3, the government had reduced the tax

On November 3, the central government had announced to reduce the excise duty on petrol and diesel. The very next day, the prices of petrol and diesel were reduced across the country and many states also reduced the tax on petrol and diesel. This brought relief to the common man. Since then the prices of petrol and diesel have not increased. Trends show that there has been no increase in the prices of petrol and diesel in the country for the last 75 days, while the prices of crude oil have increased during this period.

Still central and state governments are charging heavy tax on petrol

The base price of petrol is currently Rs 48 and that of diesel is close to Rs 49. The central government is charging an excise duty of Rs 27.90 on petrol and Rs 21.80 on diesel. After this, the state governments charge VAT and Cess on their own, after which their price becomes close to 2 times the base price.

How is the price of petrol and diesel determined?

Till June 2010, the government used to fix the price of petrol and it was changed every 15 days. After June 26, 2010, the government left it to the oil companies to decide the price of petrol. Similarly, till October 2014, the price of diesel was also fixed by the government, but from October 19, 2014, the government also handed over this work to the oil companies.

Oil companies determine the price of petrol and diesel daily keeping in mind the price of crude oil in the international market, exchange rate, tax, transportation cost of petrol and diesel, and many other things.

India imports 85% of its crude oil requirement

We procure more than 85% of our crude oil requirement from outside. We have to pay for it in dollars. In such a situation, due to the rise in the price of crude oil and the strengthening of the dollar, petrol and diesel start becoming expensive. Crude oil comes in barrels. One barrel, that is, 159 liters of crude oil.