Congress demands benefit of low crude oil prices to be passed on to consumers

Congress on Wednesday demanded the NDA government to pass on the relief of record low crude oil price to the people by lowering petrol, diesel, LPG rates. The global scare over coronavirus, also called COVID-19, has raised worries over oil demand, pushing oil prices below $40 a barrel. The recent price over between top exporters Saudi Arabia and Russia has further put pressure on crude prices.

Congress spokesperson Randeep Surjewala said, "International crude oil prices are all-time low in the last 15 years, down to $35-38 per barrel, yet petrol and diesel prices are skyrocketing, while the common people, the middle class, the farmers, the Transporters and Small and Medium Businesses are bearing the pain of high petrol rates."

READ | Gujarat Congress Responds To Internal Rift Rumours; Tells CM Rupani To Focus On The State

Comparative figures

The party explained that the price of Indian Crude Basket was Rs 6,318.76 per barrel on May 26, 2014, which on Wednesday fell to a mere Rs 2,799.38 per barrel as the crude is $37.85 per barrel and Dollar-Rupee rate is 73.96 Rupees per Dollar. 

"This means that there has been a drop in crude oil prices by as much as Rs 3519.38 per barrel i.e. 55.695! Petrol, diesel and LPG were being sold at Rs 71.41/litre, Rs 56.71/litre and Rs 412 per cylinder respectively when the BJP assumed office in May 2014, if all the benefit of lower crude rates is given to the consumers the petrol and diesel can be brought down to Rs 39.76 and Rs 31.58 per litre," he said.

READ | Oil Sinks On Saudi Move As Equities Lose Early Puff On Virus Fear

Consumers paying extra, slash prices

Surjewala said that consumers are being charged Rs 30.53 per litre extra for petrol and Rs 31.43 per litre extra for diesel. He asserted that whenever the prices of crude oil had increased, the Centre has increased rates for petroleum products and so the government must slash prices of such items in the same ratio as crude prices have plunged.

READ | Saudi Aramco To Boost Oil Production By 1 Million Barrels Per Day Amid Price War

India to benefit as crude prices fall

The Indian economy will likely see significant benefits in the form of lower current account deficit, reduced inflation and higher GDP following a slump in international crude oil prices, Kotak Institutional Equities Research said on Wednesday. The collapse in cooperation between Saudi Arabia and Russia has triggered a plunge in oil prices that shows no signs of abating. Saudi Arabia has been cooperating with Russia to limit supply to the oil market and prop up prices.

Market participants had expected OPEC+ (OPEC nations plus 10 non-OPEC oil-producing countries including Russia) to extend production cuts set to expire in March. But faced with the news that Russia would not participate, Saudi Arabia has decided not to go for it alone. The kingdom has signalled it will boost production above 10 million barrels per day.

The government's tax revenues saw a spike in FY2016 when crude prices fell sharply. Lower crude prices will benefit automobiles (lower cost of ownership), aviation (lower fuel bill), cement (lower pet-coke prices), consumer companies (lower packaging costs), city gas companies (lower gas prices), oil marketing companies (higher marketing margins on automobile fuels) and paints, it said.

(With inputs from agencies) (PTI photo)

READ | Indian Economy To Benefit From Slump In International Oil Prices