OMCs again resort to alternate day fuel price revision

Oil marketing companies seem to have moved once again towards a revised fuel price mechanism, shifting to the practice of changing petrol and diesel rates after every couple of days rather than undertaking changes on a daily basis.

In the last few days, pump prices of petrol and diesel have been revised every two days but the practice had not helped consumers as even under this system prices have only moved up making the fuel dearer.

On Thursday, OMCs kept retail price of petrol and diesel unchanged. So petrol still costs Rs 96.66 per litre and diesel Rs 87.41 per litre in Delhi.

In Mumbai, where petrol prices crossed Rs 100 mark for the first time ever on May 29, the prices continued to be at new high of Rs 102.58 per litre on Thursday. Diesel prices also remained unchanged at Rs 94.70 a litre, the highest among metros.

Across the country as well, the petrol and diesel price prices remained static on Thursday but its actual retail prices varied depending on the level of local levies in respective states.

The price pause on Thursday came after petrol and diesel prices were raised by 25 and 13 paisa per litre respectively in Delhi on Wednesday. Prior to Wednesday, there was no price revision on Tuesday. Similarly, while fuel prices were raised on Monday, it remained unchanged in the previous day.

"It seems oil companies are giving a sense of relief to consumers as fuel prices are not being raised on a daily basis. But still prices are not actually falling but being raised on every alternate day too this month," said an oil sector expert not willing to be named.

He said that the practice of daily price revision, started after deregulation of petrol and diesel prices.

Under daily price revision, OMCs revised petrol and diesel prices every morning benchmarking retail fuel prices to a 15-day rolling average of global refined products' prices and dollar exchange rate. However, in a market where fuel prices need to be increased successively, alternate day price revision seems to be the flavour.

With Thursday's price pause, fuel prices have now increased on 25 days and remained unchanged on 23 days since May 1. The 25 increases have taken up petrol prices by Rs 6.26 per litre in Delhi. Similarly, diesel have increased by Rs 6.68 per litre in the national capital.

With global crude prices also rising on a pick up demand and depleting inventories of world's largest fuel guzzler -- the US, retail prices of fuel in India is expected to firm up further in coming days. The benchmark Brent crude is currently over $74 a barrel on ICE or Intercontinental Exchange.