Petrol prices hit record highDate: 08 January 2021 Tags: Basics of Economics
Petrol price in the national capital hit an all-time high of Rs 84.2 per litre after hike in prices by marketing companies.
Oil marketing companies had also hiked the prices of petrol by 26 paise per litre and that of diesel by 25 paise per litre recently after holding prices constant for 30 days.
Brent crude is currently priced at $54 per barrel, its highest level since the crash in crude oil prices due to the Covid-19 pandemic in March.
A decision by Saudi Arabia to cut crude oil output by one million barrels per day in February and March has also contributed to the hardening of crude oil prices.
Central and state levies currently account for about 62% of the retail price of petrol and around 57% of the retail price of diesel in the national capital.
Reasons for the hike
The key reasons behind the high prices of petrol and diesel despite relatively low crude oil prices are hikes in government levies over the past year.
The central government hiked the excise duty on petrol to Rs 32.98 per litre from Rs 19.98 per litre at the beginning of 2019, increased the excise duty on diesel to Rs 31.83 per litre from Rs 15.83 over the same period to boost government revenues as economic activity fell due to the pandemic.
A number of state governments also hiked value-added taxes to boost revenues which were hit by low economic activity due to Covid-19 related restriction on movement of goods and people.