In recent times, the common citizens of India are facing the brunt of rising inflation, particularly when it comes to the costs of petrol and diesel. Despite a significant drop in international crude oil prices—hitting their lowest levels in over 2.5 years—the benefits have yet to trickle down to consumers. Oil companies have maintained their pricing structure, and consumers have seen no relief despite soaring profits for these corporations.
As of September 27, 2024, the price of crude oil has plummeted from $84 per barrel to $71.31 per barrel. This trend indicates a continued downward trajectory, suggesting that the government could potentially save upwards of ₹60,000 crore in import expenses this year. However, the reduction in crude oil prices has not led to any adjustments in the retail prices of petrol and diesel.
Why Aren’t Consumers Benefiting?
The Investment Information and Credit Rating Agency (INCRA) reports that crude oil prices have decreased by 12% since March of this year. There are speculations that Saudi Arabia may be abandoning its price target of $100 per barrel for crude oil in an effort to ramp up production, which could lead to even lower prices in the future. INCRA suggests that if oil marketing companies wish to do so, they could certainly pass along some of these savings to customers, yet this has not materialized.
Amidst this backdrop, oil marketing companies have been enjoying unprecedented profits, keeping fuel prices stable for an extended period. Consequently, customers are left wondering why the benefits of declining crude oil prices have not been reflected at the pump.
Profits of Major Oil Companies
Recent financial reports reveal that India’s leading oil companies—Bharat Petroleum, Hindustan Petroleum, and Indian Oil—have posted substantial profits. A combined profit of ₹81,000 crore was reported for the financial year 2023-24, with Indian Oil leading the way at ₹39,619 crore, followed by Bharat Petroleum at ₹26,673 crore, and Hindustan Petroleum at ₹14,694 crore. These startling figures underline the companies’ strong financial position during a period marked by escalating fuel prices for consumers.
Government Savings from Decreased Prices
Furthermore, the declining crude oil prices have also positioned the government to reap significant savings. A reduction of just one dollar per barrel translates to about ₹13,000 crore in annual savings on India’s import bill. The Economic Survey of 2024 had projected an average crude oil price of approximately $84 per barrel for this fiscal year; however, with the current prices fluctuating between $70 to $75 per barrel, the government stands to save substantially more.
Conclusion
While the decrease in global crude oil prices presents an opportunity for both consumers and the government to benefit, the lack of a corresponding drop in retail fuel prices raises important questions about market practices and corporate responsibility. It remains to be seen how long oil marketing companies will maintain their prices, but the hope is that relief will come soon for the average Indian consumer struggling with inflation.
