Does the price of petrol increase after election?

 

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On Monday, oil prices rose above $93 a barrel, briefly touching $94, but domestic fuel prices remained unchanged, prompting fears of a sharp price increase after five states' elections next month.

 

Fears that Omicorn would depress oil demand caused crude oil prices to drop to $69 per barrel on December 1 from $81 per barrel on November 4, but as Prices steadily In the third wave of Covid-19, which appeared to be less harsh than the previous rounds, slowly increased by a third to $93 Geopolitical tensions between Russia, one of the world's top three oil producers, and Western powers over Ukraine are propelling the current downward spiral, which comes at a time when supply is tightening. Oil prices have risen $12 per barrel, or 15%, on the international market since November 4, while domestic fuel prices, which are based on international rates, have remained unchanged. "Politics, not economics, is dictating the current behaviour of domestic oil companies," said Sunil Kumar Sinha, principal economist at India Ratings and Research. If world oil prices stay at that level after the elections we should expect a shock.

Domestic oil marketing businesses are likely to boost prices significantly after the elections to align domestic prices with international rates and make up for whatever losses they may be experiencing now, according to inha. This would have a significant effect on inflation and inflationary expectations.

 

Small daily price adjustments are easier for customers to live with than large, abrupt price increases, according to Sinha, since they give them time to modify their behaviour. It is a jolt and it transfers as abruptly into transportation costs and other commodities pricing," jolt said.

 

This Photo by Unknown Author is licensed under https://www.istockphoto.com/

MK Surana, chairman of Hindustan Petroleum Corporation, said last week that retail prices of petrol and diesel will be harmonised with international pricing over time, but that daily price variations will be inconvenient for consumers.

According to data from the government's Petroleum Planning and Analysis Cell, the price of crude oil imported by India climbed to $94.54 per barrel on Monday, the highest level since October 2014. As geopolitical tensions between Ukraine and Russia fuelled supply fears amid low stocks, crude oil prices rose. However, Russia is now withdrawing some of its military from the Ukraine border, which could help to down world prices.

 

After total deregulation of fuel pricing in 2014, oil companies in India are legally free to sync their prices with global rates — but, fearing public backlash, they normally have prices should be frozen in the run-up to elections.

Last week, the Organization of Petroleum Exporting Countries (OPEC), which controls a big portion of India's crude supply, predicted that global oil consumption would climb even faster this year as the global economy recovers.