At a time when crude oil prices have fallen dramatically to an 18-month low in the international market, and petrol prices should have been reduced by around Rs. 2 to Rs. 2.50 per litre, the continued volatility in the value of the rupee against the dollar has hampered extending this relief in the form of reducing retail petrol prices in the country.
The continued downslide in the value of the rupee, to an all-time low of Rs. 57.30 to a U.S. dollar, has made imports very costly, cancelling the profits of falling crude prices, and forcing the Oil Marketing Companies (OMCs) to adopt a wait-and-watch policy. “The oil companies are fully cognisant of this. They are watching the volatility in rupee and global crude oil prices. Very soon, they will take a decision,” Petroleum and Natural Gas Minister Jaipal Reddy told journalists here.
OMCs review the petrol prices on the 1st and 16th of every month, based on average imported cost, and forex rates of the previous fortnight. However, they left the review this time around on June 16, and decided to stick with the present prices. “There is a lot of volatility in prices of crude oil and the value of the rupee. There is double volatility. We are relieved that the price of crude oil has eased. But this has been upset by the decrease in the value of the rupee. We are watching the situation with keen interest, and we are watching it on a day-to-day basis. For a nation that is 76 per cent-dependent on imports to meet its requirements, the value of the rupee becomes very important,” Mr. Reddy remarked.
Officials in the OMCs said all the three companies — Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL) — will watch the situation during the next few days, and continue to hold on to petrol prices, before taking a call on reduction.
The oil companies had last reduced petrol prices by Rs. 2.02 a litre, with effect from June 3, in a partial rollback from the steep Rs. 7.54 per litre hike effected last month. Petrol, at present, costs Rs. 70.24 in Delhi.
The last revision was done keeping in mind the average $115.77 per barrel rate of gasoline, against which domestic petrol prices are benchmarked. Gasoline rates have since fallen to $106.93 per barrel. But the rupee has devalued to Rs. 55.69 per dollar, from Rs. 54.96 per dollar (average of the first fortnight of June).
OMC officials confessed that there was a scope for reduction of petrol prices by around Rs. 2 to Rs. 2.50 per litre but with the rupee again tumbling, things have gone wrong.
Keywords: petrol price, rupee value, Oil Marketing Companies
the way ATF price has been reduced by 5% with effect from 16.6.2012 in
the same way petrol price should have been reduced from the same date.
since petrol and ATF both are co related to the market price. how is
that ATF prices are reduced but not petrol?
India is still bang hit hard by soft crude which has gone down by 25% due to shear lack of patriotism in every Indian. We use lpg and kerosene but don't use infinite free solar or cheaper than subsidized lpg the induction electricity. We use motor fuels never caring for electric traction or judicious use of every drop of former. We have killed railways which consume 10 times less diesel than road. Electric railway is 50 times more fuel efficient than roads. We never do rain water harvesting for reduced energy use for irrigation and other water uses. We all are finishing this poor nation.
even the companies never waited for 1st and 16th of any month when the
price of petrol were to be hiked but now they are not only waiting but
also skipping these dates when the rates are to slashed.
Our Economy is going through the hard time and RBI needs to cut the
interest rates desperately but this inflation is not allowing it to do
so. At this time Oil Companies should help in nation building by
slashing the price of petrol ASAP. It would help in controlling
inflation to some extent and will let RBI to cut the interest rate.
But for them profit is the main motive, even the case of cartel can be
filed against them as well, similar to cartel case against Cement
Companies and similarly they should be fined accordingly.
I was reading the THE HINDU news of 24th may and found that the
government used the Crude Oil Prices as the criteria for the steepest
hike in petrol prices but now they are taking Gasoline prices as the
criteria. In INTERNATIONAL MARKET crude Oil prices has been decreased
by more than 16%(107$ around 24th May to 89.6$ on 21st June 2012 )
whereas gasoline price 7.5% during the same period.
This government uses two different criteria depending on their need.
Whatever comes out to beneficial they follow that one and are trying
to fool the public which is already burdened by the monstrous
INFLATION.
If we follow the criteria used by govt. and oil Companies during the
price hike then the price of petrol should be slashed by 14.5% which
comes out to be around Rs11/liter, of which Rs 2 has been according to
the govt. but still Rs9/liter are needed to slashed immediately.
Above calculation have also taken depreciation of rupee value in
consideration.
The average barrel rate the article is quoting upon is based on the Brent Crude on the London exchange and is old news. As of today the price is $90/barrel. The Nymex crude price based on New York Mercantile exchange is $78 per barrel.
Typically there is a spread of 20% between these future exchanges.
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