Latest News
-
Gold Prices In US: Yellow Metal Rates Surge Amid Escalating Tensions In Middle East; Hit Record High -
Jio Financial Services Sees 80% YoY Decline In Q4 Net Profit, Net Interest Income Dives 70% -
Rs 25/Share Dividend Payout: Multibagger Small Cap Tata Stock Declares 52.6% Jump In Q4 PAT -
Wipro Q4 Results: Cons PAT Up 5% QoQ To Rs 2,834.6 Crore, Revenue Guidance Weaker Than Estimates -
How To Apply Your Voter ID Card Online: Quick Guide For Indian Citizens -
Emmforce Autotech IPO Debut April 23: Issue Size, Price Band, Check Details? -
1:5 Stock Split: PSU Bank Fixes Record Date For First Ever Stock Split; Buy For Rs 650-680 Targets -
Closing Bell: Market Stages Smart Recovery, Sensex & Nifty Snap 4-Day Losing Streak Led By HDFC Bank -
Hindustan Zinc's Quarterly Profits Dive 21% Amid Global Metal Price Slump, Shares Plummet; Buy Or Not? -
IRFC, RVNL, IRCTC, Railtel: Railway Stocks In Focus As Election Polls Begin; Mega Rs 10-12 Lakh Crore Plan
Why is petrol price at a historic high, when crude oil is at 18-month low?
The fact remains that there are three variables when it comes to petrol prices - the first is crude prices, the second is the rupee movement against the dollar and third are taxes. Now, while crude prices have hit a 18 month low, taxes have stayed constant, while the rupee has dropped against the dollar. So, the real culprit for higher petrol prices at the bunk is the falling rupee.
Last year around the same time, the rupee was trading around Rs 48. Today, it is trading at Rs 57.14. This means that a barrel of oil, which has to be paid in dollars has to be paid for at Rs 57.14 to the dollar and not Rs 48. It's unfortunate that the fall in crude prices has coincided with a fall in the value of the rupee against the dollar, negating all benefits of falling crude.
Another major factor in determining petrol prices is taxes. Central and state taxes determine the cost of petrol prices at the bunk.
For example, the central government levies a specific excise duty of Rs 14.35 a litre and 3% education cess to garner Rs 14.78 from consumers. Then states levy VAT on petrol, which is extremely high in states like Karnataka and low in states like Puducherry.
The state government's are unlikely to forego their revenue by reducing VAT, if the oil marketing companies hike petrol prices. Ditto for the central government.
This means that unless the rupee appreciates and crude stays still, individuals can continue to pay a higher price for petrol.
As for diesel, LPG and kerosene they are not aligned to market rates, so the variables really don't matter, since the government has fixed the rates and bears the losses on behalf of consumers.
GoodReturns.in
