Retail fuel price hike 'inevitable' if global oil pressures persist: Former BPCL Director HR
New Delhi, May 24
A further hike in retail fuel prices may be unavoidable if current global energy disruptions continue, Raj Kumar Dubey, former Director HR at Bharat Petroleum Corporation Ltd, said, outlining three options before policymakers as crude markets face sustained volatility.
"Now, there are two or three options open. One is the price hike, or the petroleum companies take up the losses and make up more and more losses. And the third is the government funds through deficit financing," Dubey said.
He noted that global price hikes of 20 per cent to 50% had initially been seen as temporary, but "the way things are panning out, I think this is going to continue."
Pointing to the destruction of energy infrastructure in Iran due to conflict in West Asia, he said, "if this scenario continues, then I think another price hike should be there."
While he did not specify the quantum, he said, "If this continues for a long time, the hike is inevitable."
On supply security, Dubey credited diplomatic efforts and diversification for insulating India from shocks despite geopolitical tensions.
With more than 2 million barrels of oil being stopped at the Straits of Hormuz, he said, managing the shortfall was possible "through the diversification of supply sources only. Whether it is Russian oil or whether it is from Africa or from many other places."
BPCL and Indian energy companies have expanded sourcing significantly. "Earlier, we used to have only 20 supply points. From 20, we have gone to 40 supply points now, which includes Russia also," Dubey said. "To that extent, the diversified supply lines are giving us enough security." He noted that fuel consumption in India has actually increased after the war, "and still, we are able to manage without any shortages."
The crisis is also expected to accelerate India's shift to green energy, he said. With more than 200 GW of solar power installed, "the momentum will increase now because the kind of foreign exchange problems this energy import bill brings, I think it will definitely accelerate towards the green energy options."
Dubey highlighted the Prime Minister's target to raise natural gas to 15% of the energy mix from the current 7-8%, along with a "tremendous push on Compressed Bio Gas (CBG)." He called the 20% ethanol blending initiative "a very proactive stand," adding that without it, "you could have 20% more shortage of petrol and the consequence for foreign exchange."
He said diversification into green energy, solar, and hydrogen remains key. "Accelerating our efforts towards hydrogen as a fuel, as a very sustainable fuel for the future... these are some of the things we need to do," he added.
— ANI
Reader Comments
Finally someone from the industry talking realistically! 🌟 The way fuel prices are handled in India has always been a tightrope walk. I'm particularly encouraged by the push towards green energy - 200 GW solar is impressive and the ethanol blending is smart policy. But we need to accelerate hydrogen adoption too, as he mentioned. Every rupee saved on imports is a rupee for our future.
Okay, I get the global pressures. But why is it always the common man who has to bear the brunt? 🙄 The petroleum companies have made massive profits in recent years. Let them absorb some losses for a change instead of passing everything to us. And this 'diversification' talk - Russian oil has been controversial. Are we sure about the ethics? Just asking the uncomfortable questions.
As someone who follows global energy markets, this is spot-on analysis. The Strait of Hormuz disruption is a serious matter - 2 million barrels per day is massive. I'm impressed India managed to avoid shortages through diversification. That's sophisticated energy diplomacy. The green energy pivot makes economic sense too - why spend billions on imports when you can generate power at home? Smart long-term thinking.
My concern is the timing. With inflation already high, another fuel price hike will trigger cascading effects on transportation, food prices, everything 😔 The government has done well on supply security but they need to think about demand-side management too. More public transport investment, electric vehicle incentives, work-from-home options - these could reduce our vulnerability. We can't just keep hiking prices endlessly.
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