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Daily Revision of Petrol & Diesel Prices- Here Is the Impact

Starting June 16, 2017, the prices of transport fuels, i.e. petrol and diesel, are subject to a daily revision across the country—at almost 58,000 petrol pumps—in sync with international oil prices. With this, we have joined the select club of developed countries such as the US, Japan, Australia, Germany and Russia. It means the state retailers will reset the price of petrol and diesel each day, rather than wait for a fortnightly revision, which has been the norm so far.

On a broader note, this move will align the retail pricing of crude products in line with price changes in the international markets, and bring in transparency in the pricing of crude products.

Among all the positives, first, this move is believed to crystallise the outlook for oil marketing companies’ marketing margin—or the difference between the cost of procurement and the price charged by retailers—and therefore raise confidence over the overall sustainability of this broad deregulation initiative.

Shorter time lag between crude purchase and products sales will collapse, thus allowing prices to reflect cost and avoid artificial distortions. It may also enhance OMCs’ ability to pass the prices into the economy more effectively.

Therefore, we can say that the retail fuel prices are expected to be more aligned to market dynamics.

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