Fuel prices were unchanged on Wednesday despite weaker global crude oil prices. State-run oil marketing companies (OMCs) have kept fuel rates static for 25 days.

International oil prices have remained for over a week on concerns of rising cases of Covid-19 around the globe. Major oil-producing countries are worried that demand may take a hit due to the rising cases.

While rising global cases have led to lower crude oil prices, it has not led to any change in domestic fuel prices. State-run oil companies were expected to cut oil prices following a reduction in global oil prices.

It seems OMCs want to ensure there is no fluctuation in international prices in view of the high volatility. Petrol and diesel prices remain unchanged as a result. In Delhi, a litre of petrol is retailing at Rs 101.84 per litre and nearly Rs 108 in Mumbai. The price remains above Rs 102 in Chennai and Kolkata.

There are at least 25-30 cities where petrol price has crossed the three-figure mark.

Diesel prices also remain elevated. It is retailing at Rs 89.87 per litre in the national capital and over Rs 97 per litre in Mumbai. Diesel prices remain above Rs 90 per litre in most major cities in the country.

RISING FUEL PRICES HURTING ECONOMY

As economic recovery rebounds, citizens and businesses are feeling the pinch of rising fuel price rise. Experts are worried that constantly high fuel prices may hurt economic recovery in the long run as inflation will rise as a result.

Although a recovery in demand has been witnessed after the second wave, it could lead an early saturation point due to rising prices of essential commodities. It may be noted that higher petrol and diesel prices have a cascading impact on the value of numerous goods and services.

High oil prices could further erode customer sentiments that have improved as the second Covid wave recedes. Despite the economic consequences of high fuel prices, no steps have been initiated by the government to reduce fuel prices yet.

The government has made it clear that it is not in a position to cut excise duty levied on petrol and diesel. Excise duty was raised in 2020 after the pandemic dented other sources of revenue. It is worth mentioning that India levies the highest taxes on petrol and diesel.

Even state governments have decided against reducing value-added tax (VAT) collected on fuel, citing the current economic condition.

In such a scenario, fuel prices can come down only if international crude oil prices fall. While some weakness has been observed in global rates, OMCs do not seem to be in a rush to revise domestic petrol and diesel prices in order to provide some relief to citizens.

Fuel rates in Indian cities: