Petrol, Diesel Price to Go Up from June 1

The price of petrol and diesel would go up by Rs.1 and 0.45 respectively from June 1, according to media reports. The state run oil companies have been reviewing the price every fortnightly. Recently the devaluation of rupees against the US dollar could be the major reason behind the hike in the prices.

Since the petrol and diesel prices were deregulated, the price of these goods in the domestic market has been changing in compliance with the international crude price. Due to the high value of dollar against Indian rupees, the crude price becomes dearer for Indian oil firms.

In order to reduce the loss due to the devaluation of rupees, the oil firms are bound to raise the price and the direct burden would be on the consumers those are the end buyers at retail rate.

On the flip side, the price of petrol and diesel were cut couple of months ago due to the decrease in the crude price at the international market. However, the consumers would be need to pay more for the petrol and diesel from June.

And the prices may go down again if Indian rupees become stronger in the currency market.

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Diesel Prices will be Hiked every Month

Minister for Oil M. Veerappa Moily, said that diesel prices will be hiked by 40 -50 Paisa per liter every month, till losses on the nation’s most used fuel are completely wiped out.

On January 17th the Government decided to deregulate oil prices from state control, and the powers were given to state owned oil firms. The firms may raise the prices in small measures every month, till all their losses are cleared.

The minister also added that the decision to raise diesel prices in small doses every month will stand until further orders. The decision for retail price hike was coupled with a move to charge bulk consumers like defense, railways and state transport undertakings market price which is almost Rs.10 a liter more than retail selling rate, to save an estimated Rs.12,907 crore in annual subsidy.

The states like Tamil Nadu and Kerala asked their public transport people to refuel at petrol pumps instead of buying diesel from oil firms directly, as they are doing till now. Doing so they will avoid paying the market price mandated for them.

Moily said this point has come to his view and suggested that, instead of doing so, the states should reduce local sales tax and VAT on diesel to cut prices.

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