Why petrol and diesel prices aren’t falling

Although crude prices have fallen $7 a barrel, or about 10%, in two months, domestic consumers of petrol and diesel have barely benefitted. Here’s why,

1. Rupee has depreciated 5% against the dollar since July 1, falling to Rs 72.31 on Tuesday.

2. Budget raised taxes on fuel by Rs 2/litre, which along with increase in state taxes, raised prices of petrol & diesel by about Rs 2.5/litre on July 6. (marked in graph)

3. Petrol, diesel rates in Delhi have gained Rs 1.57/litre and Rs 0.98/litre, respectively, between July 1 and Sept 3.

4. Oil companies have increased marketing margins on fuel by 77%in two years.

5. Companies set pump prices daily based on global rates of petrol and diesel and exchange rate for the trailing fortnight.

6. Crude has fallen on worries that a protracted US-China trade war and a slowdown in major economies would hurt global oil demand.

Illustration: Anirban Bora