- America, Russia and Saudi Arabia look to ramp up production
- Brent crude prices drop by $1.10
The fuel prices have been rising continuously for the past fortnight. Petrol prices in Mumbai have crossed Rs 85 per litre while diesel prices are just about to breach the Rs 74 mark. The entire nation has been feeling the pinch but with the fuel prices no longer being regulated by the central government and the crude oil prices going up, the oil companies have their hands tied.
But now, there is hope for us as the top 3 crude oil producers in the world, America, Russia and Saudi Arabia are thinking about scaling up their production to match the demand. With this news coming in, the crude oil prices have dropped by just over $1 per barrel already but it will take at least a fortnight more before the drop in prices is substantial enough to affect the retail prices in India.
The high fuel prices in the country are a combined result of central and state taxation on fuel. Since fuel has not been included under GST, it is still a part of the archaic tax regime. While the crude oil prices were low, the government repeatedly levied cess on fuel to fund its infrastructure and other development programs while keeping the annual budget deficit in check. While this strategy has certainly helped the central government reinforce federal coffers, the recent increase in crude oil has made fuel more expensive than ever before.
With no elections in sight, the chances of the centre or even the state governments reducing their taxes are quite slim and the only hope for us is the global correction in oil prices which are expected to fall below $60 from the current $75.34 price.