Fuel prices in Delhi and North India have risen over the last 11 days despite a drop in global crude oil prices [1, 2].
These increases place a higher financial burden on commuters and logistics providers in the region. The trend persists even as the government moves toward more sustainable fuel alternatives, raising questions about why retail prices do not reflect lower production costs.
Since May 15, 2024, the cumulative hike for petrol and diesel has reached nearly ₹7.5 per litre [1, 2]. On Monday, petrol prices increased by ₹2.61 per litre, while diesel prices rose by ₹2.71 per litre [2]. In Delhi, the price of petrol now stands at ₹102.12 per litre, and diesel at ₹95 per litre [2].
Compressed Natural Gas has also seen a price surge, now costing ₹83 per kg [1].
Economist Montek Singh said that these price hikes occurred even though crude oil was cheaper [1, 2]. The government also approved the E30 ethanol blend — a mixture containing 30 percent ethanol — which is intended to reduce reliance on imported oil [1, 2]. However, this policy change has not resulted in lower prices for consumers at the pump [1, 2].
Singh said that taxes and market dynamics have prevented the retail prices from decreasing. The disconnect between the cost of raw crude and the final price paid by consumers suggests that the benefits of cheaper oil are not being passed down through the supply chain [1, 2].
“Cumulative hikes since May 15 have reached nearly ₹7.5 per litre.”
The divergence between falling global crude prices and rising domestic retail costs indicates that government taxation and distribution margins are the primary drivers of fuel pricing in India. While the adoption of E30 ethanol blends aims for long-term energy security and lower costs, the immediate impact is being offset by fiscal policy and market volatility.
