Major Benefit of Daily Fuel Price Revision
Few year back, petrol prices used to alter with huge margin and after a considerable time of 6-7 months. The newly formed Modi government decided to review fuel prices every 15 days. Since then, the fuel prices are almost changing every fortnight.
It should be understood that the sudden change in petrol and diesel rates directly increases prices of market goods and services whereas a sudden drop in the fuel prices doesn’t guarantee to lower the prices of goods and services. The wholesale businessmen and middle-men in the retail chain used to take advantage of this loophole for profiteering (unfair profit making).
Moreover, price of crude oil at international level changes daily. Hence, it becomes cumbersome for oil companies to adjust the profit/loss that occurred due to the unchanged pricing of fuels in the domestic market. If the fuel prices are changed on daily basis, oil companies can keep better financial records. Also, they can also pass on the correct fuel price to the end consumer.
The data taken from IOCL website and world bank website verifies the argument. See the graphical representation below. It can be easily seen that frequent revision of fuel prices has significantly reduced the effect on inflation rate.
As per the IOCL website data, the rate of petrol was 80.11 Rs per liter in Mumbai on 7th June, 2014. The lowest recorded price was 62.75 Rs per liter in March, 2016 . The current price as on 1st June 2017 is 76.55 Rs per liter.
On the same lines, the price of diesel in Mumbai as on 1st June, 2014 was 65.84 Rs per liter. The price was reduced upto RS 49.51 per liter in September 2015. The current price (as on 16 May 2017) is 60.47 Rs per liter. [source: IOCL data]
In short, we should support the daily revision of petrol and diesel prices due to following benefits;
- It will help reduce the inflation
- Consumer will get the fuel at more precise rate.
Whats your opinion about Daily Fuel Price Revision Policy? I’m eager to learn your thoughts on this topic.