Petrol Should Be At 56 Rupees; Despite Crude Prices Halving, No Cut In Fuel Rates In India

New Delhi: Even as international crude oil prices have fallen steeply over the past two and a half years, petrol prices in India have seen only a marginal reduction.

According to an analysis of official figures reported by The Hindu, petrol prices in the country have declined by just 1.9 percent since June 2022. During the same period, global crude oil prices have dropped by around 41.5 percent.

The gap between the fall in crude prices and the negligible relief at fuel pumps has effectively allowed oil companies to retain massive margins, with the Union government standing by the deregulated pricing system introduced over the years.

Prices Rose Fast, Then Frozen

Data from the Petroleum Planning and Analysis Cell show that soon after the Russia–Ukraine war began in February 2022, the price of crude oil imported by India crossed 100 dollars per barrel during the March–July period. By June 2022, it had climbed to 116 dollars per barrel.

As crude prices surged, oil marketing companies raised petrol prices in Delhi to 105.1 rupees per litre by April 2022. In May 2022, when the average crude price was around 110 dollars per barrel, petrol was priced at 96.7 rupees per litre in Delhi. After that, prices were effectively frozen.

For more than 21 months -until mid-March 2024- there was no revision in retail fuel prices. This went against the dynamic pricing system introduced in 2017, under which prices were supposed to be revised daily in line with global crude rates.

Petrol Should Have Been Around 56 Rupees

From June 2022 to February 2025, the average price of crude purchased by India fell to 67.9 dollars per barrel- a 41.5 percent decline.

However, during this period, the retail price of petrol in Delhi fell only from 96.7 rupees per litre to 94.8 rupees per litre. That is a reduction of just 1.9 percent.

If petrol prices had fallen in proportion to the drop in crude oil prices, the June 2022 rate of 96.7 rupees per litre should have come down to roughly 56.5 rupees per litre in Delhi. Instead, consumers continue to pay close to 95 rupees per litre.

Even the limited reduction that took place was not due to oil companies lowering their base prices. In mid-March 2024, the Union government cut excise duty on petrol by 2 rupees per litre. This brought the Delhi price down from 96.7 rupees to 94.7 rupees. It later rose slightly to 94.8 rupees per litre.

In Parliament, the Petroleum Ministry has repeatedly stated that fuel pricing is the responsibility of oil marketing companies and that the government does not interfere.

Deregulation Under Both UPA And NDA

The present situation has revived questions about fuel price deregulation carried out by successive governments.

The second UPA government removed price controls on petrol in 2010. Later, the first NDA government removed diesel price controls in 2014. Both Congress and BJP governments argued that deregulation would benefit consumers when international prices declined.

However, the data now shows a different reality. When crude prices rise, the burden is passed on quickly to consumers. But when prices fall sharply, the benefit does not reach the public in the same way.

The promise that market-linked pricing would ensure fairness and transparency stands under serious doubt, as Indian consumers continue to pay high fuel prices despite a steep fall in global crude rates.