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Note: This article was originally published on February 21, 2021 and was republished on October 11, 20201 after fuel prices rose for a seventh consecutive day.
On an unrelenting roll, retail petrol prices are rolling towards the Rs 100 mark across parts of India.
It’s clearly one of the most expensive rates ordinary people pay anywhere in the world. So why are fuel prices this high?
The answer lies in a five-letter word: taxes.
Retail petrol and diesel prices are in theory decontrolled — or linked to global crude oil prices. This means that if crude prices fall, retail prices do too. And global prices did fall – very sharply too through much of 2020. So did retail prices come down too. No.
When the pandemic hit last year, state-owned oil retailers stopped price revisions for a record 82 days. Consumers have been hit by a double whammy — they were not benefitting from the fall in crude prices in the first half and then they were facing record-high prices in the second half.
But what caused prices to surge this much?