Petrol price slashed by Rs 1.85

The news of Rs 1.85 slashed off the petrol price is likely to spread a positive mood in the country. The big surprise is the depreciation comes in advance than the stated date to mark the agility with which the government is moving to serve the nation. According to the earlier reports, the meeting on the petrol price revision was to be called on 17th of this month to weigh the options. But the drop in the crude oil price and the considerably stagnant rupee value against the dollar has been the major encouragement for the current revision. Moreover, price cutdown comes for the first time in the last two years after the deregulation of the petrol price in 2010 June. The revised petrol price in few major cities is Delhi at Rs 66.22, Kolkata at Rs 70.84, Mumbai at Rs 71.47 and Chennai at Rs 70.38.

Be it the peer pressure faced by the government or rather a red herring thrown by them, its likely to work in favour of the government given the economic slowdown and high inflation in the market. The state owned oil companies Bharat Petroleum, Indian Oil Corporation and Hindustan Petroleum have informed the government their intention to pass down the profit to the consumers earlier this month. They maintained that if the crude oil price continues to stand at $113/$115 per barrel and the dollar does not depreciate further from Rs 40.30 last week, they will go ahead with their decision. Since petrol was deregulated in June 2010, the decision making power lies entirely with the Oil companies atleast nominally. However, government expects them to seek their advice before committing formally.

Despite a deluge of complaints from consumers and opposition in the parliament, the petrol price was hiked by Rs 1.80 earlier this month. Moreover, the decision came when the oil companies were making a profit of 25 paise by then. Nevertheless, they decided to go ahead with the hike to observe the market trend for a fortnight as they cannot trust the fluctuating rupee value against the dollar. Even the current revision is subjective to a fortnight practice, which is likely to continue depending on the market stability.