Oil minister Dharmendra Pradhan: Government won't intervene to cut petrol, diesel prices

Fuel prices have been on a constant rise with petrol prices shooting up by nearly Rs 7-8 on Wednesday

Fuel prices have been on a constant rise with petrol prices shooting up by nearly Rs 7-8 on Wednesday

He said dynamic pricing ensures that the benefit of even the smallest change in worldwide oil prices can be passed down the line to the dealers and the end-users.

Oil Minister Dharmendra Pradhan said that an analysis of the global trends indicates that the retail fuel prices will likely ease out in the days to come.

Explaining high fuel prices, Union Petroleum and Natural Gas Minister Dharmendra Pradhan on Wednesday said oil prices in the global market have increased in the last three months due to Hurricanes Irma and Harvey, and assured that it will cool down soon. Traditionally, fuel prices were determined on a cost-plus basis, which led domestic prices to fall in line with the cost of inputs like crude oil.

The news reports of a possible government intervention to keep the retail fuel prices in check came in the wake of petrol and diesel prices rising to hit three-year highs in some cities, only, without the people noticing it much this time.

He added that the price fluctuation happens due to the variation in worldwide crude oil price, and there is complete transparency in fixing the price of petrol and diesel.

Remaining non-commital on excise cut, Pradhan turned the government's criticism on its head to make a case for bringing petrol and diesel under GST - something the Centre has been trying hard to do - and indirectly shift the blame on high state taxes. Albeit, of late, the rise in the retail fuel prices was seen due the impact of hurricanes Harvey and Irma on the worldwide fuel markets, Dharmendra Pradhan said, adding that the situation is likely to ease out in the coming days. These hikes pushed up excise duty on petrol by Rs 11.77 per litre and by Rs 13.47 on diesel. In Mumbai, the price rose to Rs 79.48 per litre on September 12 from Rs 76.70 per litre on June 16.

Petrol has become costlier by Rs 7 per litre since July, pushing pump prices to their three-year high in cities such as Mumbai as high level of state taxes amplified the impact of rise in global prices. This suggests quite clearly that the government, not the consumer, has been the biggest beneficiary of lower crude oil prices since 2014. The deregulation of petrol and diesel pricing, in 2010 and 2014 respectively, caused fuel prices to be determined primarily by the forces of supply and demand rather than input costs.

The excise duty hike resulted in the government's excise mop-up more than doubling to Rs 242,000 crore in 2016-17 from Rs 99,000 crore in 2014-15.