The third day of the current week began with a big good news for the ‘aam aadmi’. There was new abuzz with the rumor that after a continuous hike in fuel prices for the last 16 days, petrol and diesel prices would be cut by 60 paise per litre.

But a rude shock – that some even termed as being sarcastic, was meted out to the public with a reduction of just 1 paise in the price of petro fuels. This despite the fact that the website of the Indian Oil Corporation had mentioned that there would be a cut of 60 paise in the price of auto fuel. However, after the debacle, the IOC said that it was a technical fault.

Fuel prices have seen a sharp and continuous rise ever since the Karnataka elections. The price of petrol has shot up by Rs 3.79 per litre and that of diesel by Rs 3.37 after the oil marketing companies ended their 19-day price halt in the run up to Karnataka polls.

On May 30, the price of petrol in the national capital was at Rs 78.42 and the diesel was priced at Rs 69.30. In Mumbai the prices of petrol and diesel were at Rs 86.23 and Rs 73.78, respectively. The IOC website however made the big mistake by showing the the price of petrol in Delhi was down by 60 paisa at Rs 77.83 and diesel by 56 paisa to Rs 68.75.

After Saudi Arabia and Russia said that they were ready to ease supply co9ntraints that have pushed crude prices to their highest since 2014, the international crude oil prices were down on Tuesday. The Organization of the Petroleum Exporting Countries (OPEC) and Russia had last year decided to cut the supply of crude globally to tighten up the market and to shore up the prices, following the historic drop in oil prices to the lowest point in over a decade.

86 per cent of crude oil, 75 per cent of natural gas and 95 per cent of LPG is annually imported by India from OPEC member countries. On the average, about 80 percent of the total requirement of crude oil is imported by the country. Therefore, any increase in prices in the international market results in a corresponding change in the domestic price of petrol, diesel and LPG.

The nonstop price hike for over 15 days had increased public anger. Government was put under severe pressure by the opposition and farmers. They had threatened the government of protests if it did not cut the excise duty or bring the petroleum products under the GST. Currently, Rs. 19.48 is levied as excise duty by the centre on petrol and Rs 15.33 on diesel. There would be a loss of Rs 10,725 crore in revenue for every Rs 1 cut in central excise duty.

(Adapted from BusinessToday.com)