In the past 100 days, retail petrol prices have remained unchanged at the pump, whereas the crude prices (Indian basket) have reduced by around $20/barrel. The retail prices have possibly been kept at the same level to allow the Oil Marketing Companies (OMC) to compensate for the losses they incurred in the recent past. Between November 2021 and March 2022, despite international crude prices skyrocketing, the retail prices remained unchanged owing to the Assembly Elections in five States. A similar freeze was enforced in the recent months to curtail inflation. Such repeated interventions have resulted in heavy losses for the OMCs. Therefore, in the recent months, the OMCs have not revised the base price to make up for the losses.
Crude mismatch
Between November 2021 and March 2022, retail petrol prices did not increase despite the price of crude oil going up significantly during the period, owing to the elections in five States.
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- The freeze in petrol prices before the elections in five States
- The ₹10/litre increase in retail price following the completion of elections
- In June 2022, when the crude prices averaged $116/bbl, the retail selling price was ₹96.72/litre in Delhi. In July, when crude prices averaged $105/bbl, the retail prices stayed at ₹96.72. In August, when crude prices further fell and averaged $97/bbl, the retail prices continued to remain at ₹96.72
Incurring losses
Chart shows the net profit/loss incurred by oil marketing companies in the first quarter of the past six financial years. Multiple price freezes in the past few months, despite an escalating crude oil price, have resulted in heavy losses for public sector oil marketing companies
Base price effect
The chart shows the base price and dealer’s commission charged on every litre of petrol sold in Delhi (₹). It also shows crude oil price (Indian basket in $/bbl). Despite the decline in crude prices after June, the base price has not been revised by the OMCs to reflect the fall. This is possibly done to compensate for the losses in earlier periods.
Source: PPAC, IOCL, HPCL, BPCL
Also read: Data | An accrued price: What determines the high costs of retail fuel in India?
