Retail fuel pricing in India is deregulated, and Oil Marketing Companies (OMCs) are to set prices based on market forces. However, despite fluctuations in crude oil rates, the retail selling prices of petrol and diesel have mostly remained stagnant. Crude oil prices change daily and yet, this is not directly reflected in the prices paid by consumers.
One factor at play is the role played by the government. This is an important factor since the fuel retail market is largely dominated by Public Sector Undertakings (PSUs) like Indian Oil Corporation, Hindustan Petroleum Corporation, and Bharat Petroleum Corporation. Additionally, taxes imposed by both the central and state governments contribute to the burden borne by consumers.
In this episode of Energonomics, Richa Mishra decodes the factors that determine fuel prices in the country.