A state of shell shock soon for consumers in Odisha. The intense shelling by the Russian forces to capture Ukraine has tanked crude oil prices globally. The price of the Indian basket has shot up by over 21 percent to touch $117.39 per barrel in just 144 hours.
As per the latest estimates, the price of petrol, which is currently quoted at around Rs 101 (Jagatsinghpur) - Rs107 (Malkangiri) per litre in the State, has shot up to around Rs 126.76 per litre due to a sharp surge in the price of Indian Basket of crude (IBC).
The price of IBC on Feb 25 (a day after Russia launched its attack on Ukraine) was $96.89 per barrel. On March 3, the price per barrel is quoted at $117.39 and is estimated to have touched $120 per barrel on March 7, though the Brent crude today is being quoted at over $125 per barrel.
The price revision of petrol and diesel has not been taken up in the country since November 2021. Though the IBC in November 2021was $ 89.34 (down from $93.37/b in October 2021), it had fallen further to $83.45/b in December. For this, the price revision had not been effected in Nov and Dec 2021.
2022 Oil Flare Up
However, even in the midst of the Omicron-led third wave, the crude prices have charted a rude behaviour. In January 2022, the IBC was quoted at $ 97.09/b, and it firmed up further to $108.70b in February. The firming of the prices in Feb had been attributed to news of likely Russia-Ukraine conflict.
But as president Putin had ordered full-scale military operation on Ukraine since Feb 24, the IBC had zoomed up to touch nearly $120 per barrel as on today.
In the backdrop of elections in five states - Uttar Pradesh, Uttarakhand, Goa, Punjab and Manipur, the oil marketing companies (OMC) in the country have pressed the pause button on oil price revision since January this year.
Future Shock
As the IBC prices are now hovering at over $117/barrel, the price of the crude oil at the current rate of exchange (1 dollar = Rs 77.12) in the country is now estimated at Rs 56.93 per litre from Rs 37.51 /litre on Jan 4, 2022.
Going by the estimates, as per the OMCs, the fuel price after processing (post refinery cost) is pegged at Rs 67.63 per litre. And post addition of taxes levied by the Central government plus the dealer commission pegs the cost of petrol per litre to Rs 95.53 per litre.
If the State VAT of 28 percent on petrol is taken into account, the price of petrol per litre in Odisha is costing Rs 126.76 per litre. However, the consumer is now paying between Rs 101-107 per litre in the State.
Similarly, diesel which had a post-refinery cost of Rs 50/litre on Jan 4, 2022, is now quoted at Rs 69.51/litre. And with the addition of central taxes and cess, the diesel price in the country has now risen to Rs 93.91/litre.
Taking into account the 24 percent VAT on diesel in Odisha, the cost per litre of diesel in the State is pegged at Rs 116.4. The diesel price per litre in the State today is ranging between Rs 91 (Khordha) - Rs 97 (Malkangiri).
As per JP Morgan India's recent report, the fuel retailers like Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) are making a loss of Rs 5.7 a litre on petrol and diesel, excluding the normal margin of Rs 2.5 per litre maintained by OMCs.
The report, therefore, predicted that the oil marketing companies may effect a price rise by Rs 9 a litre or 10 per cent.
The report, however, said, "We expect a combination of small excise duty cuts (Rs 1-3 per litre) and retail price hikes (Rs 5-8 a litre) to reflect the pass-through of USD 100 per barrel oil."