There has been a sharp rise in the prices of diesel and petrol , over the past few days. This is mainly , because of the rebound seen in the global oil prices, and weak rupee-dollar exchange rates. The fear of the oversupply being due is the reason the global crude oil are tanking ,leading to rise in prices. The companies are trying to put the pressure on the ultimate customers, to recover the losses faced.

In order to determine the daily oil prices, the PSUs depends upon the international crude oil prices and  rupee-dollar exchange rates. Weak currency notes, along with recent rise in the global oil prices will make India spend much more. Experts say , that this whole situation may give rise to a supply glut. There is a huge probability that the oil market could completely fall, considering the fact that there would not be   so much of demand , eventually leading to fall in oil prices once again.

A lot of us, may not be aware of the fact that crude oil is not the end product, instead it’s an intermediary requiring additional refining. First of all, the crude is pumped through a processing facility, from where comes out the crude oil. Hence, the price of the end product is determined by amount  of complexity involved in the processing of crude. The reason why diesel tends to be slightly cheaper than petrol all over the world,  because it is less volatile, easier to refine than petrol and being heavier than petrol. For India, the trend remains the same as well. Diesel is used for industrial purposes, on the other hand petrol is used in large amounts for personal vehicles .The fact that diesel is not taxed as much as petrol by the Government , seems to be taken a reverse this year. This year on the 24th of June,2020  the prices of diesel were higher than petrol in Delhi.

The rising of fuel prices started from June 7 , for consecutive the next 22 days. This rising of prices came even though, the Indian Crude Basket saw low prices. If the crude oil go low, the consumers doesn’t have to pay for that, but here the case is quite different. As part of excessive fuel taxation by the Government, people in Delhi have to pay the highest tax rates on fuel . The price that people are paying is actually two-thirds of the Central Excise tax and the State Value Added tax.

The  fact that the GST revenue have been lower, during this lockdown it took a hard hit on the Union Government and  the State Government. This might seem to be a much feasible option to them than actually  ,having to take a firm decision on the GST. For the Union Government, this proves out to be of added advantage as it holds of the cess. This is a part which stays with the Union Government, where the State doesn’t have a  share in them. However ,chances of  inflation is fairly low.