Petrol, diesel at new heights; these 6 factors impact India's fuel prices
Fuel prices in India are continuing to rise, so much so, that they have reached levels that have never been witnessed before. This is the outcome of boiling crude oil prices.
Today, a litre of petrol has been priced at Rs 80.73 in New Delhi, at Rs 88.12 in Mumbai, at Rs 83.61 in Kolkata and at Rs 83.91 in Chennai. Meanwhile, a litre of diesel is being valued at Rs 72.82 in New Delhi, at Rs 77.32 in Mumbai, at Rs 75.68 in Kolkata and at Rs 76.98 in Chennai. Fuel prices in India are continuing to rise, so much so, that they have reached levels that have never been witnessed before. This is the outcome of boiling crude oil prices.
According to GoodReturns.com report, here's a list of six factors that impact petrol and diesel prices.
Cost of Crude Oil
Any change in international crude oil price has a direct influences on the price of crude oil in the domestic market. This is the most important factor responsible for any rise in petrol prices in India.
Increase in international demand, low production rate and any political unrest in the crude oil producing countries of the world severely affects petrol price.
Economic growth in India and other developing countries has also led to the increase in demand for oil and other essential fuels in India.
The number of people who own private vehicles has gone up in the recent past which has contributed to the increase in demand for petrol in India; this has resulted in the hike in petrol prices in India.
Mismatch of Supply & Demand
In order to meet the demands of the market, Oil refinery companies in India face problem as the cost of input price of crude oil is high thus resulting in less supply and more demand for petrol in the country.
An increase in supply results in a decrease in the price of the petrol and vice versa.
Oil refining and marketing companies maintain crude oil inventory up to six weeks, which also influences the price of the petrol and petroleum products.
The prices of petroleum products varies according to the local government policies which impose taxes on fuels.
As and when the government of India raises tax rates on fuels the oil companies in India also increases the price of the petrol to recover losses and maintain marginal profits in the oil business in India.
Rupee to Dollar Exchange Rate
The rupee-dollar exchange rate is also one of the major factors which influence the price of petrol in India.
Indian oil companies pay to the oil imported from other countries in terms of dollars, but their expenses are in rupees. So, when rupee rate plunges, you have to pay more for the USD.
Logistics is one of the significant factors in pricing retail fuel. Petrol and diesel transported to longer distances to cities or regions farther from depots will be priced higher than the places nearer to the oil companies storage area.
The reason behind the change in the prices of petrol in different cities across India.