Petrol Prices: Common Man’s Crisis

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Petrol and Diesel prices in India are at all time high level and no respite could be seen in near future. High fuel prices pushes prices of other commodities higher as transportation gets costlier, so high fuel prices could impact common man monthly budget.

Everybody has a common questionWhy Government is not stopping the price hike for petrol/diesel?

In October 2014, the government of India deregulated petrol and diesel prices. In simple terms, the government no longer decides the selling price of fuel in the country. That decision is now been taken by oil retailers such as ONGC, Indian Oil Corp, BPCL and HPCL.

Another tough decision taken by GOI was the introduction of Dynamic fuel pricing. In June 2017, the Government of India decided to introduce the Dynamic fuel pricing in India. As per the new system retail selling prices of petrol and diesel will be revised daily. Earlier state run fuel retailers use to revise fuel prices fortnightly i.e. every 01st and 16th of the month. This move, as per Oil marketing companies will ensure that the benefits of price change in international market will be passed down to the consumer.

Why crude oil prices are high?

Sanctions on Venezuelan oil industry: The U.S. government has put sanctions on state owned Venezuelan oil company which aggravated the problem in already volatile oil sector.

Tensions between Saudi Arabia and Iran: Increased instability in the Middle East alarming the global oil market.

Global oil producers limiting supply: With a view to rein global excess supply and lift prices, OPEC and other top oil producers including Russia have limited the daily crude production.

Along with above mentioned reasons, depreciating rupee making oil imports costlier.

How rising fuel prices impact Indian house hold?

Fuel bills: Rising fuel prices directly impacts our commuting expenses.

Goods and Commodities: The high fuel prices mean transportation cost goes high and which in turn pushes prices of fruits and vegetables.

Interest Rate: To contain the inflation RBI might raise the interest rates which could impact anyone who is planning to loan.

Foreign travel and education: There is another indirect impact of fuel price hike. As India’s import bill goes up the current account deficit would increase and Indian rupee could further pushed downward and which could make travel to foreign countries or studying abroad costlier.

In the next few weeks, we will share in depth analysis of Oil sector in India. The balance sheet analysis of the prime players of oil sectors like ONGC, OIL, HPC and RIL. We would also share the analysis of share price movement of these companies with factors like crude oil prices.

 

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