Price hike of Petroleum Products

Union Petroleum Minister has announced the rate hike in the petroleum products with effect from today mid – night. The reason being the same as always, Rise in Crude Oil price in International Market. Government has been doing the rate hike of petroleum products regularly from few months, this is the third time the rates are jumping in a very short duration of time. Increase in petroleum products directly results in increase in other commodities price as the transport charges will be high. It alters the supply chain management balance from the base to top. Neighboring countries, some of them not even having proper facilities are providing petroleum products at a much lower price compared to India. Government is always being increasing the prices and never bothered to cut down when the crude oil price falls down in International market.

I was going through a list of International Market price of crude oil at New York Mercentile Exchange website ( the website has listed the price of crude oil starting from December 2005 to till today. The website has list of price of crude oil at the end of every week. From the first week of May 2011 the crude oil rate has been decreasing with a slight increase in the middle for a brief and showing continuous decrease in price. The crude oil was at $ 113.93 at the end of April 2011 and when the last trade was performed last week i. e. 17th June the oil price was traded at $ 93.01, with a clear decrease of $ 20.92. But Government is increasing price rate with the reason of increased rates in International Crude oil price. The Government owned oil companies are showing considerable profit gains in the yearly report which they release, none of the companies are in loss. It is really very hard to understand.

I don’t know how the Indian oil companies calculate the percentage of increase in price related to price hike in International markets, but from my observation I can make out is Oil Price in Indian Market is inversely proportional to the Crude oil price in International Market. Whenever there is decrease in Crude Oil price in International Market there will be an increase in price of petroleum products in India but vice – versa is not true as there are no instances in the recent past in which the Government has decreased the oil prices once hiked.


Post a Comment