Petrol price likely to fall by Re 1

There is a good news on the petrol price front. The petrol prices are likely to come down by 80 p to Re 1 effective from November 16th, if everything goes according to the plans. The state owned oil companies will hold a discussion regarding the drop in the petrol price during next week to weigh the options and the consequences of the price cut. The proposal has been forwarded by the three oil companies, Bharat Petroleum, Indian Oil Corporation and Hindustan petroleum.

Apparently, the state owned oil companies are considering the price cut possibly due to the crude oil price reduction to Rs 115 from Rs 123 last month. The oil companies have reported that if the crude oil price continues to sustain at Rs 115 per barrel at the Singapore bulk market and the rupee does not depreciate further from Rs 49.30 a dollar will enable the companies to contemplate to shrink the petrol price by 80 p.  This step to decrease the petrol price is taken for the first time by the oil companies after the deregulation of the petrol price in June 2010. After the deregulation, the decision on the petrol price hike ideally remains with the oil companies and it is their prerogative to adjust the petrol price in tandem with the rupee and the crude oil market fluctuations.

Despite making a profit of around 25 p on petrol, the oil companies have decided to increase the petrol price by Rs 1.80 on October 5th due to the rupee depreciation against the dollar. However, the oil companies are said to retract on their prior decision observing the market trend in the upcoming week. This is a proposal made by the oil companies right before the winter session of the parliament to save the government from the wrath of the opposition, which is to begin from November 16th.

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