Rama Krishna Sangem
Petrol prices in the country may go up sharply immediately after the last phase of polling for five state assemblies, by March 7. The per litre price now at Rs 108 in Hyderabad is expected to go up to Rs 130 for ordinary variety. For Extra Premium (Indian Oil) which is Rs 112 per litre now will be up by Rs 140, according to the trade sources. Of course, the hike will be on a daily basis.
There is no upward revision of the prices from 2021 November first week when Election Commission began preparing the schedule for the polls. At the time, the global price of oil was around $ 63 per barrel. Now, the oil prices in international markets are around $ 98 per barrel, indicating a 33 per cent jump in the prices. Our petrol and diesel prices too go up by this percentage.
Usually, this jump in prices would have been routinely passed on to the consumers on a daily basis. But elections to UP, Punjab, Uttarakhand, Goa and Manipur assemblies have forced the oil companies to hold the prices jump for time being. Once the last phase of polling is over, that is March 7 the burden will be passed on to consumers.
It is a well known secret in our country that petrol prices will not be increased during the elections. But, immediately after the polls, the prices will sharply go up. This is one reason, why people want frequent elections to assemblies and Parliament. This year, the petrol price hike will be even more as FM Nirmala Sitharaman imposed an excise duty of Rs 2 per litre of non-ethanol mixed oil.
In our country, only 1 per cent of the oil is ethanol mixed. So, the price of remaining 90 per cent oil will go up to this extent. This duty comes into force from October 1, 2022. Soon, the prices of oil – both diesel and petrol may go up by 30 to 35 per cent. Don’t be surprised to see petrol at Rs 150 per litre by October of this year.
Why global oil prices high?
One major reason is the tensions in East Europe – Ukraine. Russia has mobilised its armies on the eastern borders of Ukraine. In response to that, the US and other NATO allies too have rushed in their troops to prevent Russian invasion of Ukraine. Even if there is no war there, the US may impose economic sanctions on Russia, a major oil producer. So, that will impact oil prices.
Another reason is picking up of the US economy after the recent third wave of Covid. The jobs rate in the US is going up. This will force the UD Federal Reserve (like our RBI) to hike interest rates which are around 3 per cent now. If that happens, foreign exchange reserves from India will be withdrawn and the value of Rupee will be diluted. That also will lead to steep hike in oil prices.
