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Updated: June 3, 2012 02:57 IST

Petrol price cut by Rs. 2 .02

Sujay Mehdudia
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On May 23, oil marketing companies announced the steepest- ever increase of Rs. 7.54 in petrol prices. Photo: Nagara Gopal
The Hindu
On May 23, oil marketing companies announced the steepest- ever increase of Rs. 7.54 in petrol prices. Photo: Nagara Gopal

Aided by the falling international crude prices, the oil marketing companies on Saturday announced a cut of Rs. 2.02 a litre in petrol prices. The reduction came into effect on Saturday night.

Petrol will now cost Rs.71.16 in Delhi. In Mumbai, the cost will come down by Rs.2.12, to Rs.76.45. In Kolkata, it has come down from Rs.77.88 to Rs.75.81, a reduction of Rs.2.07. In Chennai, it will be Rs.75.40, down by Rs.2.13.

The decision to cut the prices was taken after a fortnightly review meeting of the oil companies. On May 24, the oil companies jacked up the prices, in the steepest ever increase, by Rs.7.54 a litre, bringing sharp criticism to the ruling United Progressive Alliance (UPA) — even from its allies — and prompting the Opposition parties to call a nationwide bandh for May 31.

The Rs.7.54 increase was based on an average gasoline price of $124.37 a barrel and the rupee-dollar exchange rate of Rs.53.17 in the first fortnight of May. However, the gasoline price has since then dipped to $115.77 in the second fortnight, but the exchange rate has worsened to Rs.54.96.

The fall meant a cut in the petrol prices of Rs. 1.68, excluding local sales tax or value-added tax. In Delhi, the reduction would come to Rs. 2.02, after including a 20 per cent VAT, an official statement said.

It said the Indian basket of crude had come down from $113.08 a barrel to $106.68. “The cut could have been more for consumers, had the rupee's performance against the dollar not worsened further,” a senior oil company official said.

The oil companies are suffering heavy under-recoveries on diesel, kerosene and domestic LPG. The sales prices of these sensitive products were last revised in June 2011. Compared with the last revision, the current under-recovery, as on June 1, on diesel has gone up from Rs. 6.13 a litre to Rs. 12.53; on kerosene from Rs. 24.16 a litre to Rs. 30.53; and on an LPG domestic cylinder from Rs. 331.13 to Rs.396.00. At these rates, the under-recovery during 2012-13 is likely to be around Rs.96,000 crore. The next revision of petrol prices is due on June 16.

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What is the process for knowing the components of retail price of petrol in each state? What is the process for knowing the components cost price of petrol for each oil marketing company - before tax and after tax? If the government of India dare answer these questions, we can simply know that the bulk of the monies are designed to flow back to vested oil cartel. Not now, not since OPEC but since the decision of allowing only US dollar as the media for international purchase. If every country were to purchase crude in their own respective currency if given a choice, it will be good for the exporting country as well as the importer and in general act as a catalyst to revive bilateral and international trade. Oil prices would also come down to a pragmatic $60 to $65 to a barrel meaning at home petrol prices can be more pragmatic too. But in the long run, we better find a way to run our vehicles on alternative fuel soon.

from:  r n iyegar
Posted on: Jun 4, 2012 at 07:09 IST

Price of petrol should not have been reduced. The same should have
been hiked by Rs.25/- instead. Decrease of petrol price does not in
any way give relief to a common man. After all who is a common man? A common man is who uses public transport and do not own a bike or a car. Still this common man has been forced to pay tax. A common man cannot walk on a street since the petrol driven vehicles are parked on the streets just like hawkers uses to sell their products. A common man cannot cross a road at the point of signal since these vehicle owners do not obey the signals. Do these people need a better treatment. Recently BEST (Mumbai transport) increased their fare. The increase was alarming. No political party bothered to say anything. We, the common man, did not protest since the increase was used to hike the salary of drivers & conductors. In nutshell the petrol driven vehicle should be reduced. If rupee crosses 60 a dollar what are we going to do?

from:  Srinivasan
Posted on: Jun 3, 2012 at 10:13 IST

The government should have increased the prices in a phased rather than
a steep increase. The decline would not count after that steep increase.

from:  Vidya Sagar
Posted on: Jun 3, 2012 at 06:55 IST

Ha! Ha! what a wonderful dupe drama being played by the Govt; one day Minister states NO roll back, costs gone up we cannot bear the huge cost of subsidy etc - at same time one oil company comes out with balance sheet cites huge profits and allots 1 : 1 Bonus share, NEXT coalition partners raise a huge and cry (they are in Govt and were party to decision behind scenes, sure) demand roll back - top leaders of ruling party "stages" a comedy play feigning to look into all aspects seriously etc, then after much protest in the street and "debate/discussion" with allies ( reg: how to share the spoils and honors on change!) come out into open agreeing to reduce the price by a small amount - was this all necessary ? Are there no experts in economics and commerce who know how industries operate taking into account all variable and fixed costs to arrive at marketable rate for consumer's product? Shame on UPI and allies! Pray for better common sense to prevail to act sincerely.

from:  ManiPremnathS
Posted on: Jun 3, 2012 at 05:21 IST

There should be a regulatory authority for petroleum product like TRAI. Duty and VAT to be abolished on petroleum product. Govt. should support finding alternate source of energy to run vehicle. Petrol should be priced approximately 55/- per ltr.

from:  Mrinal
Posted on: Jun 2, 2012 at 23:54 IST

This particular experiment of petrol price hike has carried an
important lesson to the Govt - that its allies TMC and DMK may make
hell of a noise, for their own party interests, but do not have the
guts to leave the alliance, at least until the Elections. So, the
Govt shd grab this opportunity to bring in the financial reforms
fast, without the fear of losing the chair, and save the Nation from
the impending crisis, such as falling econ growth, declining Rupee
value, fiscal and current account deficits, etc. Will they act?

from:  Krish
Posted on: Jun 2, 2012 at 20:01 IST

It was predecided by govt and oil companies, Nothing New.

from:  Sanjeewan
Posted on: Jun 2, 2012 at 19:49 IST

It is a sad fact that this small rollback just means that we still have
a price rise of more than Rs.5. While agreeing that it is some relief,
we must realize that there is more to be done and this is not an
ultimate solution which bring an end to the troubles of the common man.
Sadly enough, the protests will subside and the common man will continue
to suffer.

from:  Aswin Vijayan
Posted on: Jun 2, 2012 at 18:34 IST

what a joke .......?

from:  dhanesh
Posted on: Jun 2, 2012 at 18:21 IST
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