Cheap fuel: After new highs, experts see petrol, diesel prices falling soon

Experts say domestic prices will track international ones, which have shown a declining trend

Diesel prices in Delhi on Tuesday scaled a new all-time high of Rs 59.14 per litre, while other cities too saw a considerable increase. However, industry experts and the government believe that prices will ease in the next few weeks as international prices are showing a declining trend.

In Delhi, the price of petrol, too, was at a two-year high on Tuesday at Rs 70.88 per litre. Since the implementation of daily pricing from June 16 this year, Indian basket crude oil has gone up by around 19 per — from $46 a barrel to $55.36 a barrel. However, domestic retail selling prices of petrol and diesel in Delhi have gone up by only eight per cent during this period.  

"We see a decline in crude oil prices now. Hence, there will be a balancing of fuel prices in the coming weeks. The positive global changes include increase in rig utilisation and also rise in production from Libya and Algeria, which will increase supply," said Dhaval Joshi, an analyst with Emkay Global Financial Services.

According to Petroleum Minister Dharmendra Pradhan, the main reason for the increase in product prices was the increase in international prices due to the two hurricane – Harvey and Irma – that hit the US. Thirteen per cent of the US refinery capacity was shut down due to the hurricanes. "In the past three months, the FOB (free on board) price of petrol and diesel in the international market increased by 20 per cent. The recent rise in prices is transient in nature and will ease in the coming days," said a source close to the development.  

Pradhan has been demanding that the Goods and Services Tax (GST) Council consider bringing petroleum products within the ambit of GST so as to harmonise the tax structure. Taxes constitute a significant part of the price build-up, with the excise duty on petrol and diesel at Rs 21.48 per litre and Rs 17.33 per litre, respectively. "The government has not increased excise duty on petrol and diesel in the past year and a half... The last revision being in January 2016. We demand it to be included in GST so that fuel will have a uniform tax structure," Pradhan had said.