Fuel prices have begun to climb once again. In the last couple of days, both petrol and diesel prices have gone up by around 15 paise per litre, setting off alarm bells among motorists. Industry experts opined that at this rate, prices could soon go up by ₹5 per litre. On Saturday, a litre of petrol cost ₹74.25 in Chennai and diesel, ₹70.37. On Friday, petrol was priced at ₹74.10 per litre and diesel at ₹70.24 per litre.
“I have a diesel car. Even a few rupees per litre is a big saving, especially if you drive around quite a bit in the city. But if prices are to go up further, I will consider switching to my two-wheeler to save on my expenditure on fuel,” said S. Babu, a resident of Thiruvanmiyur.
Transporters and merchants said the “expected hike” could lead to an increase in prices of other goods and that they were waiting and watching the situation. All India Motor Transport Congress vice-president (southern region) P.V. Subramani said the transport industry was down by 30%.
Hopes up
“We are waiting and watching as to what the Prime Minister will do. We had hoped for some sort of stability in fuel prices and removal of tolls. If there is no intervention, our industry will see a further dip,” he said.
A hike in diesel prices would automatically lead to an increase in prices of other goods including steel, oil and tyres, said Amandeep Singh Kandhari, who runs a tyre business. “We can expect a 3-4% increase in tyre prices and if that happens, vehicle prices too will go up. It is a domino effect,” he said.
Control mechanism
Forex consultant N. Nageswaran said fuel prices were currently at this level due to a control mechanism exercised by the regulators on both foreign exchange and the crude basket. “In reality, the prices of petrol and diesel do not reflect the actual market conditions. Once the regulators are off, the prices will have to go up. A ₹5 increase per litre should not alarm consumers,” he said.
However, an industry expert said the government could continue keeping fuel prices at the present levels if it uses the excise buffer that it created last year. “They increased excise several times despite crude prices being at lows. It would help keep the consumer price index and other prices under control,” he explained. As it is, the prices are fixed after taking international prices into consideration, he added.
