Global oil prices fall to 2002 low; petrol, diesel rates unchanged in India

International oil prices on Monday plunged to a 17-year low but retail petrol and diesel prices in India remained on freeze as oil companies continued to set off gains against the excise duty hiked by the government.

Brent crude futures dropped to around USD 23 per barrel - the lowest since November 2002, while US crude briefly dipped below USD 20 as coronavirus lockdowns dried up demand while the crude surplus ballooned.

Petrol and diesel prices in India, however, remained on freeze for the 14th day in a row. Rates were last revised on March 16 and since then oil firms continue to adjust the fall against the Rs 3 per litre hike in excise duty on two fuels done by the government.

In Delhi, petrol is priced at Rs 69.59 per litre while in Mumbai it comes for Rs 75.30. Diesel is priced at Rs 62.29 per litre in Delhi and Rs 65.21 in Mumbai.

The excise duty hike, which would give the government Rs 39,000 crore additional revenue, could have led to an increase in retail prices by Rs 3 per litre each, but the oil companies did not pass on the increase. Instead, they kept adjusting it against the fall in international crude prices.
 

A closed petrol pump during janata curfew, in the wake of coronavirus pandemic, in Prayagraj on Sunday. photo:pti

Soon after the excise duty hike, the government took authorisation from Parliament to raise excise duty on petrol and diesel by Rs 8 per litre each in future.

After the March 14 increase in taxes, the total incidence of excise duty on petrol has risen to Rs 22.98 per litre and that on diesel to Rs 18.83.

The tax on petrol was Rs 9.48 per litre when the Modi government took office in 2014 and that on diesel was Rs 3.56 a litre.

The BJP-led government had between November 2014 and January 2016 raised excise duty on petrol and diesel on nine occasions to take away gains arising from plummeting global oil prices.

In all, duty on petrol rate was hiked by Rs 11.77 per litre and that on diesel by 13.47 a litre in those 15 months that helped the government's excise mop-up more than double to Rs 2,42,000 crore in 2016-17 from Rs 99,000 crore in 2014-15.

It cut excise duty by Rs 2 in October 2017 and by Rs 1.50 a year later. But, it raised excise duty by Rs 2 per litre in July 2019.

The Saudi-Russia oil price war, combined with the destruction of demand by the coronavirus pandemic, has led to the slump in international rates.

Globally, 100 million barrels of oil is normally consumed daily, but forecasters predict as much as a quarter of that has disappeared in just a few weeks.