The price of crude oil has been on the rise in recent months, approaching the $90 mark per barrel. This is due to a number of factors, including the ongoing war in Ukraine, which has disrupted global oil supplies. The rising price of crude oil is putting pressure on fuel prices in India, but the government is unlikely to make any adjustments to the prices in the near future.
How crude oil price is fixed in India
The price of crude oil in India is influenced by a number of factors, including global supply and demand, geopolitical tensions, currency exchange rates, and government policies. The government of India plays a significant role in setting the price of fuel in the country. The Ministry of Petroleum and Natural Gas (MoPNG) sets the Ex-Refinery Price (ERP) of petrol and diesel, which is the price at which oil marketing companies (OMCs) buy fuel from refineries. The OMCs then add their margins to the ERP to arrive at the retail price of petrol and diesel.
Why the likelihood of fuel price adjustments is low
The government is unlikely to make any adjustments to the prices of petrol and diesel in the near future, even though the price of crude oil is approaching the $90 mark. This is because the government is concerned about the impact of higher fuel prices on inflation. Inflation in India is already at a 8-year high, and the government does not want to add to the burden on consumers.
The impact of rising fuel prices
The rising price of crude oil is having a number of negative impacts on the Indian economy. It is increasing the cost of transportation, which is making it more expensive to move goods and services around the country. This is leading to higher inflation and hurting businesses. The rising price of fuel is also putting a strain on household budgets, as people have to spend more money on transportation and other essentials.
Conclusion
The rising price of crude oil is a major challenge for the Indian government. The government is unlikely to make any adjustments to the prices of petrol and diesel in the near future, but the rising prices are having a negative impact on the economy. The government needs to find ways to mitigate the impact of rising fuel prices, such as providing subsidies to consumers or increasing fuel efficiency standards.