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Global fall may bring petrol, diesel prices at same level soon

Petrol is being retailed in Delhi at Rs 76.38 a litre while diesel at Rs 71.27 a litre.

New Delhi: Even without state support, transport fuels — petrol and diesel — may soon be uniformly priced across the country if the current trend of sharper fall in global petrol prices is maintained for another month.

Oil sector experts say that retail price of both petrol and diesel may equate around Rs 70 a litre before the end of the year, making the task of checking the number of relatively higher polluting diesel vehicles easier.

For the first time in many years, the gap between retail price of petrol and diesel has narrowed to Rs 5 per litre. Petrol is being retailed in Delhi at Rs 76.38 a litre while diesel at Rs 71.27 a litre.

Retail prices of the two fuels have come closer to each other despite the Centre having a Rs 7 per litre special additional excise duty on petrol while keeping this duty at just Rs 1 for diesel. The state level VAT also varies sharply between the two petroleum products. It is worth noting that the current fall in global oil prices has resulted in sharper fall in the price of petrol as compared to diesel.
In the last one month, while crude oil prices have fallen by over 20 per cent to about $65 a barrel level now, reduction in retail price (in Delhi) of petrol has been higher at Rs 7.62 per litre, while diesel prices have fallen by Rs 4.18 a litre.

Experts say with slower demand and no supply restrictions, petrol and diesel prices may fall further following a similar trend. This could mean that under the daily price revision mechanism, petrol and diesel may actually be priced very close to each other at retail level or history may be made with petrol being slightly cheaper than diesel.

“The current price trends in fuel does not do any good to the automobile companies who are already struggling with lower sales this festive season. This would definitely affect sales of diesel cars unless companies come up with innovative marketing strategies,” said a senior executive of a large automobile company, asking not to be named.

Though diesel vehicles attract higher price tag, they have been popular with customers. Higher fuel efficiency with lower fuel cost has made diesel vehicles popular in the country even though environmentalists detest this trend.

Petrol price had touched a record high of Rs 84 per litre in Delhi and Rs 91.34 a litre in Mumbai on October 4. Diesel on that day had peaked to an all-time high of Rs 75.45 a litre in Delhi and Rs 80.10 per litre in Mumbai.

Prices had started to climb from August 16. Petrol in Delhi was priced at Rs 77.14 per litre and in Mumbai it cost Rs 84.58 a litre on August 15. Diesel on that day was priced at Rs 68.72 per litre in Delhi and Rs 72.96 a litre in Mumbai.

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