What factors influence petrol and diesel prices?
The pricing of petrol and diesel in India is determined by several key components that collectively shape the final amount consumers pay at fuel stations. These factors operate at both the global and domestic levels, making fuel prices dynamic and often unpredictable.
Global crude oil prices form the foundation of fuel pricing. Since India imports a significant portion of its crude oil, any rise or fall in international rates directly affects the cost of refining and distribution. This makes global market trends one of the most influential elements in determining fuel prices.
Another important factor is the currency exchange rate, particularly the value of the Indian Rupee (₹) against the US Dollar (USD). Crude oil purchases are made in USD, so a weaker rupee results in higher import costs, even if global crude prices remain stable.
On the domestic front, government-imposed taxes significantly influence fuel prices. The central excise duty levied by the central government and the State VAT (Sales Tax) imposed by individual states contribute a major share to the retail price, resulting in price variations across different regions.
Additionally, components such as dealer commission and logistics costs play a role in final pricing. These include margins provided to fuel station operators and expenses related to transportation and distribution of fuel across cities and rural areas.
Disclaimer: Fuel prices are subject to frequent revisions based on market movements, policy changes, and taxation structures. Consumers are advised to verify daily prices through official fuel rate platforms before making purchases.
