Fuel prices have been stable for 9 days in a row which can presumably be attributed to upcoming assembly polls in West Bengal, Assam, Kerala, Tamil Nadu and Puducherry.
Rising fuel prices is a key hot topic used by opposition in the aforementioned states as a weapon against the ruling BJP.
The centre is expected to slash fuel prices if crude oil prices continue to rise.
Price fluctuations are likely before or after the dates of Mar 27 when the polls begin and May 2 when results are announced.
The rate could be raised by a few paise before Mar 27.
The Current Scenario
The government was hopeful of price stabilisation given a subsiding winter fuel demand in the wake of the pandemic and raise in output by oil producers.
However none of it came to fruition since oil was forecasted at $70/ barrel by mid year and up to $75 by the 3rd quarter.
Hence the govt could be pressured to cut fuel excise duty which is a key factor predicting high oil price impact.
The ruling govt shifted blame to older govts and OPEC+ production cuts.
Currently diesel costs more than Rs 80/l, adversely affecting farmers and transporters.
Petrol prices have crossed the Rs 100/ l mark in various areas in Rajasthan and MP which have some of the highest VAT rates on fuel, and also in Mumbai..
Precedence of Centre Intervention
Back in 2018 fuel price was frozen for 19 days between Apr 24- May 13 on the eve of Karnataka assembly polls. Prices were then increased 2 days after the election.
OMCs denied any such manipulation and insisted the move was made in “public interest”.
The Ethics
While technically oil retailers can fix their own prices, it is common knowledge that the government in the form of the oil ministry often exerts its influence on the same.
While back in 2018 OMCs cited public interest to be behind the poll-specific oil price manipulation, this time around there has been only radio silence.
Election Commission’s code of conduct was put in place on Feb 26 when the assembly polls dates were declared. However this shouldn’t get in the way as fuel price is a national level topic.
As per the code only state-centric announcements are barred.
Petrol At Rs 100/Litre: Govt Can Reduce Excise Duty To Bring Fuel Prices Down, learn more.
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