- The price of petrol and diesel in India hit a new high on June 4, with petrol pumps in Mumbai charging ₹101 per litre.
- There are at least five factors that determine the final retail price of fuel, petrol or diesel.
- Last week, the price of Brent crude was at its highest levels since May 2019 crossing the $71 per barrel mark.
Fuel prices hit another all-time high on June 7 with petrol in Delhi costing ₹94.46 per litre and in Mumbai costing ₹101 per litre. The retail price of how much it costs to fuel your car has jumped by 4% in the past one month.
While many are hoping that this is just a temporary surge, petrol is unlikely to get cheaper, by any significant amount, this year.
The net effect of the rise in fuel prices — or if they remain high for too long — is bad for the economy because the ripple effect can make other things expensive. Which is why, the Reserve Bank of India (RBI) governor, Shaktikanta Das, reiterated his request for a reduction in taxes and duties on fuel to keep inflation under control during the bio-monthly monetary policy update on June 4.
There are at least five factors that determine the final retail price of fuel, petrol or diesel. These include the price of the key raw material, crude oil, the exchange rate for the US dollar against the rupee, the cost of refining, government taxes and the level of consumer demand.
Here’s why the spike in fuel prices — whether its diesel or petrol — may be here to stay: