Decline in crude oil prices does not mean immediate fuel price cuts: Minister
New Delhi, June 18
A decline in global crude oil prices does not automatically translate into an immediate reduction in petrol and diesel prices in India, Minister of State for Petroleum & Natural Gas and Tourism Suresh Gopi said on Thursday.
Gopi told reporters that several factors influence domestic fuel pricing, including the time required for crude oil purchased at lower rates to reach India.
He said the recent increase in fuel prices cannot be rolled back instantly merely because international crude prices have softened.
"It will take time as the cheaper crude has to be transported to India via the Strait of Hormuz, which will see excessive ship traffic. Things will have to be normalised," the minister said.
Gopi said the oil marketing companies (OMCs) were significantly impacted by volatility in global energy markets following the conflict in West Asia earlier this year.
According to him, the government absorbed a substantial part of the burden arising from higher crude prices in a bid to cushion consumers from the full impact.
"By absorbing the impact, the government lost Rs 12,000 crore. None of the states reduced their revenue by charging lower duties on higher fuel prices. The central government has to run and the oil companies have to survive," he said.
He also said that fuel pricing is determined by multiple market and logistical factors and not solely by movements in international crude oil benchmarks.
On Thursday, crude oil prices declined, with the international benchmark Brent crude trading 1.64 per cent lower at around $78 per barrel. Similarly, US West Texas Intermediate (WTI) crude fell 2 per cent to about $75 per barrel.
The decline in crude prices came after progress in diplomatic efforts aimed at easing tensions in West Asia.
— IANS
Reader Comments
I'm from the US and this is fascinating. So India's fuel prices are not directly linked to global crude? Here, gas stations adjust almost daily. But I guess with all the taxes and subsidies in India, it's a different ball game. The Strait of Hormuz logistics point is interesting too.
Typical politician speak. "We absorbed the burden, we lost Rs 12,000 crore." Who asked them to absorb? Let the prices reflect the market! When crude was $120, we paid ₹120 per litre. Now crude is $78, and we still pay ₹105. The math doesn't add up. States should also reduce their VAT. Everyone points fingers but the consumer suffers.
At least the minister is being honest. Transport costs and refining take time. And yes, OMCs need to survive. But why is the government using this as an excuse to not reduce excise duty? 😡 The burden is always on the common man. Meanwhile, the rich buy SUVs and we struggle with fuel costs.
Fair point about the logistics. Oil tankers don't just teleport. But the government could announce a future reduction date to give people hope. Transparency would help. Otherwise it just sounds like more excuses to keep taxes high.
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