Data | Why petrol prices in India have remained unchanged despite falling crude oil costs

Retail petrol prices have remained unchanged at the pump while the crude prices (Indian basket) have reduced by around $20/barrel

In the past 100 days, retail petrol prices have remained unchanged at the pump, whereas the crude prices (Indian basket) have reduced by around $20/barrel. The retail prices have possibly been kept at the same level to allow the Oil Marketing Companies (OMC) to compensate for the losses they incurred in the recent past. Between November 2021 and March 2022, despite international crude prices skyrocketing, the retail prices remained unchanged owing to the Assembly Elections in five States. A similar freeze was enforced in the recent months to curtail inflation. Such repeated interventions have resulted in heavy losses for the OMCs. Therefore, in the recent months, the OMCs have not revised the base price to make up for the losses.

Between November 2021 and March 2022, retail petrol prices did not increase despite the price of crude oil going up significantly during the period, owing to the elections in five States.

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Chart shows the net profit/loss incurred by oil marketing companies in the first quarter of the past six financial years. Multiple price freezes in the past few months, despite an escalating crude oil price, have resulted in heavy losses for public sector oil marketing companies

 The chart shows the base price and dealer’s commission charged on every litre of petrol sold in Delhi (₹). It also shows crude oil price (Indian basket in $/bbl). Despite the decline in crude prices after June, the base price has not been revised by the OMCs to reflect the fall. This is possibly done to compensate for the losses in earlier periods.

Source: PPAC, IOCL, HPCL, BPCL

Also read: Data | An accrued price: What determines the high costs of retail fuel in India?