Petrol, Diesel, CNG Price Hike: Why Did The Government Increase Fuel Prices?

Indian consumers are facing higher fuel bills once again. State-owned oil marketing companies (OMCs) on Friday increased petrol and diesel prices in key cities after keeping retail prices steady for weeks despite rising crude oil prices globally. The country has recorded a significant increase of almost Rs 3 a litre each in the prices of both the petrol and diesel after the gap of 4 years almost. The price of petrol in Delhi has jumped to Rs 97.77 from Rs 94.77 per litre. Diesel has been sold at Rs 90.67 a litre, up from Rs 87.67 per litre.

The prices of the CNG have also been increased by authorities. Delhi: Authorities increased the price of CNG by Rs 2 from 77.09 per kg to Rs 79.09 per kg. In Mumbai also, the price of CNG rose by Rs 2 a kg.

Why is the government hiking prices?

An increase in the uncertainty of the international energy market is primarily behind the current rise.

The Brent crude price is also elevated due to fears that oil supply from West Asia could be disrupted due to the ongoing dispute in Iran. Tensions are mounting in the energy market over Strait of Hormuz, a critical passageway for oil

A significant percentage of Indian crude oil is imported. Hence, any sustained spike in international crude prices will immediately pass through to domestic fuel prices, margins of oil marketing companies and risks of inflation.

Oil companies had been taking on some of the cost burden for several weeks to avoid sudden strain on consumers, reports said. However, with global crude prices remaining high and supply concerns mounting, it has reportedly become increasingly difficult to maintain the old retail rates.

The government had earlier indicated review of fuel prices

The latest amendment was not a surprise.

Earlier, Union Petroleum Minister Hardeep Singh Puri had indicated that if crude oil prices continue to remain high globally, then fuel prices may have to be revised finally.

Earlier this week, at a Confederation of Indian Industry (CII) event, Puri had hinted that if international energy pressures continue to persist, the government would have to take a call on revising petroleum product prices.

PM Modi’s fuel conservation appeal catches the eye

The fuel price hike comes as Prime Minister Narendra Modi has been asking citizens to cut down on fuel use and shift to more sustainable options.

Several government departments, companies and state administrations have been discussing fuel conservation, efficient transport and cleaner energy use over the past few days with growing uncertainty over energy on a global scale.

Also Read: CNG Prices Hiked In Mumbai To ₹84/kg — Will Rising Fuel Costs Push Auto, Taxi Fares Higher?

Cab fares and public transport could get costlier

It is the public transport section that is predicted to be affected directly by the hike in the price of CNG.

A majority of the autorickshaws, taxis, buses and commercial vehicles in metro cities like Delhi and Mumbai use compressed natural gas (CNG), and operators of the transport services may opt for revisions of fares amid a steep increase in fuel prices.

In Mumbai, autorickshaw unions have already demanded a revision in the minimum base fare post-CNG revision.

New Fuel Rates

Also Read: Petrol, Diesel Prices Hiked Across India: Check Delhi, Mumbai, Bengaluru, Chennai, Kolkata Fuel Rates For Today May 15