Fuel prices up after polls, at 4-year high

Petrol prices are now just 1 cent a litre off an all time high at many stations across New Zealand

This was the first hike in 19-days but the state-owned oil companies have been hiking fuel prices since June a year ago.

Prices were last revised on April 24 when they were hiked by 13 paise each.

According to estimates, since the start of April- Indian Oil Corp, Bharat Petroleum Corp Ltd and Hindustan Petroleum Corp Ltd- have suffered the total loss of around Rs 1,500-1,700 crore with rising worldwide crude oil prices. According to the International Olympic Committee website, now petrol in Delhi will be available at Rs 74.80 per litre.

State-owned fuel retailers issued a notification earlier in 2017 stating that come May 1, 2017, a pilot policy would be initiated according to which, petrol and diesel prices will change every day in sync with global rates, much like what happens in most advanced markets.

Last June, Indian oil companies had moved from a "once-in-a-fortnight" revision of petrol and diesel to daily revisions.

India's petrol, diesel prices are among Southeast Asia's highest due to high taxes, which make up for almost 40-45% of the final retail price.

Petrol and diesel prices have been hiked yet again by 17 paise per litre and 21 paise per litre respectively.

"Drivers are already suffering as last month saw nearly 3p a litre being added to the average price of petrol and diesel, making it the worst monthly fuel price rise since December 2016". Since 2012 union government has withdrawn all subsidies on fuel prices and the oil companies permitted to hike or reduce fuel prices on basis of the global price of crude. Benchmark worldwide rate for petrol during this time went up from $ 78.84 per barrel to $ 82.98, while diesel rates during this period have climbed from $ 84.68 per barrel to $ 88.63. The rupee steadily weakening against the dollar only makes matters worse.

Now that Karnataka election is out of the way, OMCs might go for a sharp increase in petrol, diesel prices to make up for the losses incurred since April 24.

One of the toughest decisions of the Modi govt to give autonomy to OMC on fuel prices without interference and subsidies is likely to cost electoral response to the ruling party of the NDA which will face polls in 2019 as a referendum for its poll promises and welfare initiatives.

Poor and rural households are the biggest losers in the monthly fuel price reviews after Kerosene prices were hiked by Sh1.50 by the Energy Regulatory Commission. "You can expect OMCs to resume hiking fuel prices a day or two after elections", the expert told ET Now last week. Because of the reduction in excise duty, diesel prices had on October 4, 2017, come down to Rs 56.89 per litre and petrol to Rs 68.38 per litre.

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