What goes up must come down was Newton’s third law, but that didn’t hold true for petrol prices. But there is some respite in sight.
State-run oil retailers are planning to reduce petrol prices by Rs. 2 per litre, with effect from Thursday, November 17. If this happens, petrol will cost Rs. 66.66 per litre in Delhi which at present, costs Rs. 68.66 per litre.
Since decontrol of petrol prices in June 2010, oil companies have increased the prices of petrol at frequent intervals. They have the freedom to revise prices every fortnight. But, this is the first time oil companies are actually pricing a price reduction.
It has to be noted that oil companies increased the price of petrol by Rs. 1.80 on November 3. If you were among that rare breed of car owners who hasn’t filled up petrol in the past 12 days, you wouldn’t even notice this cut in prices. In essence, the reduction of Rs. 2 per litre simply means you will pay 20 paise less per litre of petrol from November 17. Also read: The impact of petrol price hike on small car owners
Petrol prices in India are determined on the basis of crude oil prices of Brent and Dubai crude and petrol rates of Singapore bulk market. According to The Times of India, last Friday, the prices of Brent crude oil retreated 61 cents and the Singapore crude basket has dropped from $125 to $115 per barrel. Hence, the petrol price cut has become imminent for the Indian market.
Though the Rs. 2 per litre is a sigh of relief, it isn’t significant savings for car owners because the actual reduction is only 18 paise. For instance, a Hyundai i10 owner who drives for 1000 kms every month has to spend an excess of Rs. 857 annually due to the price hike of Rs. 1.82 with effect from November 3rd. Now he will only save Rs. 84.70 if the price is reduced by Rs. 2 with effect from November 17th.
The following table shows the petrol prices and various hikes implemented during January – November 2011.
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*Petrol prices in Rs. per litre and not accurate