Prices at the pump were unchanged for nine days, the longest gap between two revisions since January, even as the cost of crude in India rose nearly 5% from $ 64 / barrel to $ 67, alongside the strong recovery of crude.
It is undeniable that prices at the pump could be increased by a few more breaks in the 19 days before the start of the poll on March 27. But the situation is reminiscent of 2018.
After fuel prices peaked 55 months before the Karnataka Assembly election, the government pushed state-run fuel retailers to maintain the price line. They did so for 19 days from April 24 to May 13, starting to raise prices two days after the vote ended.
Technically, retailers are free to decide on prices. But it is common knowledge that the petroleum ministry can – and does – influence such decisions.
In 2018, the oil company denied any government interference, saying prices were frozen in “the public interest.” This time, the leaders simply refused to talk about the issue.
The Center’s unease with rising fuel prices is understandable as it emerged as a poll issue and gave the opposition a grip against the BJP.
The price of gasoline has crossed the psychological barrier of Rs 100 per liter in several towns and villages in Rajasthan and Madhya Pradesh, which have high VAT.
It is a touching distance from the Rs 100 mark in other cities including Mumbai. Diesel sells for well over Rs 80 per liter nationwide, increasing costs for farmers and transporters.
The government had placed its hopes on a combination of oil producers increasing production and declining winter demand to calm the rise in prices. But those hopes have been dashed, and nearly every bank on Wall Street has projected oil at $ 70 / barrel by the summer and $ 75 in the third quarter of the calendar year.
If that happens, pressure will mount on the government to reduce excise taxes, one of the main factors amplifying the impact of high oil prices. He fended off criticism by throwing the blame on previous governments and Opec + production cuts.
The Center had increased excise duties on gasoline by 13 rupees per liter and diesel by 16 rupees in two installments on March 16 and May 5 when crude prices collapsed as demand evaporated afterwards. that Covid-19 had shut down economies.