Petrol prices hiked again

Petrol prices have risen by Rs. 1.90 per litre, delivering another blow to consumers already battling stubbornly high double-digit food inflation, and potentially accelerating the shift to diesel by car buyers and factories. This is the 13th increase in petrol prices since the fuel was decontrolled in June last year, and second since the middle of last month when prices were raised by more than Rs. 3. The latest increase comes after Brent crude oil fell for four consecutive days before rising about half a dollar on Thursday. Oil companies have never cut petrol prices since the government lifted price controls although crude oil has fluctuated. The oil ministry is also seeking a meeting of the Empowered Group of Ministers to consider a rise in the price of diesel and possibly cooking gas and kerosene. A litre of petrol now costs nearly Rs. 28 more than diesel. The gap was barely Rs. 11 in the middle of last year. Petrol prices were last raised by over Rs. 3 a litre on September 15. With the latest price rise, the fuel’s price has risen 33.5% since it was decontrolled in June 2010. Diesel prices have risen barely 2% over the same period. As a result, consumers are queuing up to buy diesel cars and even industrial consumers have started using diesel instead of furnace oil, which is a low-grade industrial fuel that normally sells below the price of diesel. Diesel sales galloped nearly 10% in September while fuel oil sales have declined this year. The government’s pricing policy and absence compensation to oil companies for selling kerosene and cooking gas below cost has hurt oil marketing companies. HPCL on Tuesday reported a net loss of Rs. 3,364.48 crore for the quarter ended September 30. BPCL, which announced its result on Monday, also reported a net loss of Rs. 3,229 crore.