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Petrol price: Fuel prices on fire as crude price tops $57 a barrel | India Business News – Times of India

NEW DELHI: Petrol price made a new record at Rs 84.45 a litre in Delhi and crossed Rs 90 in Mumbai on Wednesday in tandem with crude topping $57/barrel for the first time since February 2020 as economic optimism outweighed concerns over fresh virus scare in Europe and China.
Diesel price made a fresh record at Rs 81.34 in Mumbai and narrowed the gap with previous peak in Delhi as state-run fuel retailers, who dominate the market, resumed daily price revision after a 5-day gap to pass on the impact of crude’s week-long rally.
After the latest hike, diesel costs Rs 74.63 a litre in Delhi, 82 paise short of the record Rs 75.45 on October 4, 2018. Petrol hit its highest in Mumbai at Rs 91.34 on October 4, 2018.

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When fuel prices rise, the cost of everything else also shoots up. This impacts common people adversely. The government must reduce the tax burden, especially at a time when many are already suffering due to job loss or salary cuts.

Crude has been on an upswing on Covid-19 vaccine rollout, Saudi offer of an additional million barrel per day production cut and an agreement among OPEC-plus grouping to hold the output level in February. A higher-than-expected drawdown of US strategic oil reserves has buoyed sentiments further.
But part of the blame for skyrocketing pump prices also lies with the high Central excise and state taxes, which amp up the impact of increase in crude price. Taxes make up over 60% of retail prices in Delhi, considered benchmark market, and more in states with higher VAT such as Maharashtra.
The Centre had raised excise duty on petrol cumulatively by Rs 13 per litre and diesel by Rs 16 in two tranches on March 16 and May 5 to suck out the benefit of historic crude price collapse as the pandemic shut down economies around the world. But fuel retailers did not raise pump prices and adjusting the excise hike against higher margins due to falling crude. But as states followed with VAT hikes, retailers passed it on by raising prices. Yet, consumers largely remained unaffected since only essential service vehicles were out on roads.
But now that demand is back to near-normal, consumers are paying through their nose because the Centre and states are continuing with the higher excise.

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