Kolkata: More than 90 countries around the world have been forced to raise retail prices of petrol and diesel following the surge in crude oil price after the outbreak of hostilities between Iran and the US Israel combine of Feb 28. Prices have risen the highest in Cambodia — an astounding 67.8% and the list includes all big economies such as the US, Germany and France. India, however, has successfully been holding on to earlier retail prices so far. Reports indicate that the Indian crude basket is now about $147.24 per barrel as of March 24.
In early March, Iran closed the Strait of Hormuz through which 20% of the world’s crude oil shipments pass. The crisis in the world energy markets in the following days has been such that IEA chief Fatih Birol has said that the current crisis is worse than the oil shocks of the 1970s and the gas crisis following Russia’s attack on Ukraine in 2022 put together.
Some countries have raised pump level prices so far
- US: More than 30%
- China: About 20%
- South Korea: About 10%
- Nigeria: Nearly 50%
- UK: About 9%
- France: About 17%
- Germany: About 14%
- Canada: About 28%
- Myanmar: More than 55%.
- Philippines: More than 50%
- Cambodia: About 67.8%
- Vietnam: Almost 50%
- Pakistan: More than 24%
- Sri Lanka: Close to 34%
The point to note is that these are average increases. Some big countries such as the US have different extent of orice hikmes in different regiions. Its most populous state California has suffered a far worse rise in petrol (called gasolene) and diesel prices compared to the rest of the country. While analysts point out that more countries are about to join the list since retail prices are revised once a month.
India resists retail price rise
On Thursday evening, the Indian government cut excise on petrol and diesel by Rs 10 a litre. The Modi government preferred to take a hit on its revenue and not opt for a rise in the retail prices. The move will deprive it of a significant amount of revenue and it will also impact the deficit figures. As a result, the government either has to curb its expenditure or resort to higher borrowings.
State VAT component on petro products not touched yet
It must be noted that the state governments also raise a lot of revenue by taxing petrol and diesel. The state governments have not yet decided to lower the VAT they levy on these products.
To tackle the energy crisis arising out of the Gulf crisis, India has raised LPG prices on both domestic and commercial cylinders by Rs 60 and Rs 114.50 respectively. ATF prices have also been raised 5.7% in the country.
The oil marketing companies are continuously buying crude at a very high price and are insurring losses since they cannot pass on the higher inout prices on to the people. The Centre’s move will take a signifcant share of the burden away from them. Private petrol, diesel marketer Nyara Energy has already raised petrol prices by Rs 5 per litre and diesel by Rs 3 per litre.