That Pockets What On Every Liter Of Gasoline And Diesel

A rebound in oil prices, along with taxes that exceed the base price, means gasoline and diesel are the most expensive in more than two years.

Oil traders began raising prices from Nov. 20 after a two-month hiatus. That happened as crude rose to more than $ 50 a barrel, gaining 19% in the last month.

However 30-40% of the sale price is tied to a reference crude Brent. The bulk of what consumers pay at the gas station consists of central and state taxes, and other charges.

For example, petrol and diesel in Delhi cost respectively 83.71 rs and 73.87 rs a liter respectively on 14 December 2020. This is the highest since September 2018. The respective prices on 1 December, the latest data for which the breakdown is available, was Rs 82.34 and Rs 72.42 liter.

According to the split available on the Indian Oil Corp. website, taxes contribute more than 63% of the gasoline and 58.6% of the diesel sales price.

High rates have prevented retail prices from falling as much as crude even though prices are market tied in India. Brent fell to $ 19 a barrel in April from $ 66 in early 2020 when Covid-19 blockades triggered economic uncertainty and demand fell. Instead of handing over the benefit to consumers, the government increased a central excise tax on petrol and diesel twice – 10 and 13 rupees a liter – in May.

The increase helped the government’s excise revenues swell to Rs 1.61 lakh crore between April and October 2020, growing 40.9% year-on-year, according to data from the Comptroller General of Accounts. Then government tax revenues declined as the economy contracted. Central taxes are higher than the base price of crude since December 1st.

Oil Traders Will Reach

For oil market companies, the rebound in Brent oil is likely to create inventory gains in the third quarter – selling inventory-bought inventory at a lower price to a higher market price. According to an ICICI securities report, further price increases are needed to maintain net market margins and compensate for a weak gross refining margin. The brokerage estimates the invention gain at Rs 450-880 in the third quarter.

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