The rupee-dollar exchange rate has dropped to an all-time low of Rs 71.42 to a dollar on August 31. This meant India had to import 82 percent of its fuel requirements at around $77.06, a very high rate, today, thereby taking fuel prices to an all-time high of Rs 86.56 per litre for petrol and Rs 75.54 per litre for diesel in Mumbai.
Union minister of Petroleum and Natural Gas, Dharmendra Pradhan, blamed the ‘isolated’ policies of the US for the ‘abnormally’ rising fuel prices in the country. Due to sanctions on Tehran from the US, India had to reduce its imports from Iran, subsequently reducing the total fuel availability in the country. This came at a time when India’s crude oil imports from Iran had increased by 52 percent in June 2018. Iran is the third biggest producer in the Organisation of the Petroleum Exporting Countries (OPEC).
The output from the OPEC rose by 220,000 barrels per day (BPD) in August to a 2018 high of 32.79 million bpd, a Reuters survey found. Trade disputes between the US and other major economies including China and the European Union are expected to hurt oil demand if they are not settled soon.
As per sources, the fuel prices have increased by around Rs 5 per litre in the past 7 months. The excise duty has remained unchanged for the past four months but the VAT applied on diesel today is Rs 10.12 per litre and that on petrol is Rs 16.42 per litre. This had also led to several transport unions holding agitations in July and demanding the government to bring petrol and diesel under the ambit of GST.
The beleaguered Indian motorist
The hapless Indian motorists continue to pay through their noses for pricey fuel which has been burning a big hole in their wallets for the past year or so. Not only that, but the abject condition of roads across the country during the ongoing monsoon season is also a contributory factor to motorists having to tank up more often.
On the other hand, according to a government release, the majority of fuel refineries in the country had failed to meet the production targets in the month of July.
Diesel inches closer to petrol prices
The price differential between petrol and diesel in Mumbai has also reduced to one of the lowest of the year – at Rs 11.02 per litre, which means petrol cars seem to have as good an operational benefit as their diesel siblings.