Diesel Is More Expensive Than Petrol, 1st Time In History! Find Out How?

For the first time in the country, the pump price of diesel is all to set to surpass the petrol price in New Delhi. This development makes it the most expensive transport fuel for the first time in a long time.

Read to find out more…

Diesel Price Will Exceed Petrol in New Delhi?

All these years globally, the diesel prices have always been slightly higher than petrol prices. 

Although in India, due to the lopsided taxation structure, diesel attracts lesser tax compared to petrol, hence its price is lower than the latter. 

Diesel is currently priced at Rs 79.40 per litre in New Delhi while petrol’s price is Rs 79.76 per litre, just 36 paise short of the petrol price. 

The diesel prices have consistently increased by 50-60 paise per litre whereas the petrol price has decreased to just 20 paise on June 23. Looking at the trend of the pricing of the two fuel for the past few days, diesel prices are set to exceed petrol prices in the next few days.

An oil sector expert from one of the big four audit and advisor firms on the condition of anonymity said, ”Diesel price movement is sharper in international market and if oil companies follow the global price trend, diesel price will surpass that of petrol later this week. It will be after many years that this would happen and is expected to sustain for some time unless government changes the tax structure of the petroleum products again.”

The Reason Behind the Surge!

According to the Indian Oil Corporation (IOL) the base price of diesel is Rs 22.93 per litre and that of petrol is Rs 22. 11 per litre. Though the base price of diesel is expensive than petrol its retail price is lower than petrol due to the varied central and state taxes.

The reason for the rise in diesel prices in the capital is Delhi Government’s decision in early May to increase the Value Added Tax (VAT)  on diesel from 16.75% to 30% and on petrol from 27% to 30%.

Subsequently, the retail price of diesel and diesel surged by Rs 7.10 and Rs 1.67 per litre respectively. 

Currently the Central excise on diesel is Rs 31.83 per litre and on petrol is Rs 32.98 per litre. 

The VAT on diesel is Rs 17.60 per litre and on petrol is Rs 17.71 per litre.

With the central taxes already reaching identical levels, this move, furthermore hastened the price parity between the two transport fuels.

Impact on the Citizens and the Automobile Industry!

The owners whose cars run on petrol see this development in retail pricing with a sigh of relief whereas those who bought expensive diesel cars seem to regret their decision.

The automobile companies who have spent a fortune on ramping up their operations on manufacturing of diesel cars see this move with caution. 

This development might see a fall in the demand for diesel cars causing more damage to the companies where sales are already low by the economic slowdown due to the COVID-19 resultant lockdown. 

The expert quoted, “”The pricing development would push automobile companies to strategies being followed by companies in the wastern markets where diesel run cars are not sold on fuel pricing differential, but on overall make and quality that puts them ahead of petrol run cars.”

However, commercial sector vehicles have not welcomed the rise in diesel prices. In fact, the commercial transport sector had time and again threatened strike against the move to surge fuel prices.

With petrol and diesel price at identical levels, the adulteration of fuel has also dipped to the relief of car owners.