Petrol has become costlier by Rs 7 per litre since July, pushing pump prices to their three-year high in cities such as Mumbai as high level of state taxes amplified the impact of rise in global prices.
Pradhan explained the reason behind surge in petrol prices and said that it is linked to worldwide prices and not directly to the cost of production. Petrol per litre on that day cost Rs 70.30 in Delhi, Rs 73.05 in Kolkata and Rs 72.87 in Chennai. "Petrol and diesel prices in the country are benchmarked to the global price of these commodities", Pradhan said speaking to journalists after a meeting in New Delhi to review the daily petrol and diesel pricing regime.
Meanwhile, under the daily revision of fuel prices, petrol in Mumbai on Wednesday cost Rs 79.48 a litre, breaching the level it last touched in August 2014.
Explaining high fuel prices, Union Petroleum and Natural Gas Minister Dharmendra Pradhan on Wednesday said oil prices in the global market have increased in the last three months due to Hurricanes Irma and Harvey, and assured that it will cool down soon.
While every other product and service has been put under the Goods and Service Tax (GST), the exclusion of petrol and diesel from the new tax regime has left consumers helpless as fuel prices have hit a new high.
Defending hike in fuel prices, Mr Pradhan said that world refining capacity has come down by 13 per cent due to hurricane in U.S. due to which in last three months worldwide petrol prices have jumped by 18 per cent and diesel by 20 per cent.
The news reports brought back the ghosts of the era of regulation, when petrol and diesel price movements were much hyped events with the government dictating how much the oil refining and marketing companies could charge.
Defending the daily price revision system, Pradhan said that there are also instances when the benefits of price reduction also passed on to consumers directly. The recent price spike is expected to result in enormous gains for oil companies who while charging higher fuel prices also benefitted from lower crude rates as refinery shutdown in USA cut demand for crude oil.
The Minister said that about 13 per cent of the U.S. refining capacity got hit because of hurricanes and affected global oil prices.
He said the worldwide prices of petrol and diesel have recently gone up by 18 per cent and 20 per cent, respectively.