Consumers will have to shell out more for petrol, diesel from August 1; Here's why

petrol diesel price hike

From August 1, consumers will have to pay more for petrol and diesel. The oil marketing companies have increased the dealer commission, which is a part of price that consumers pay, reported Financial Express.

The daily rates — that is in-line with international crude prices — will include increased commission of Rs 1 per litre for petrol and Rs 0.72 a litre for diesel today onwards.

Currently, the dealers gets Rs 2.55 a litre commission on petrol and Rs 1.65 a litre on diesel.

Thus, the prices are likely to increase further or decrease comparatively less even if the international crude prices falls down.

“We had requested to increase expenses earmarked under each of these components which translates to a little over Rs 1 per litre for petrol and around 72 paise for diesel,” Ajay Bansal, president of  All India Petroleum Dealers Association (AIPDA) told the newspaper.

On June 16, at the time of implementation of daily fuel price revision, the dealers association had threatened to go on a strike due to thining profit margin.

The AIPDA had been asking for a hike as their profit margin was going down owing to the 42 percent increase in wage cost for dealers in the past six months, Bansal added.

Apart from the increase in wage cost, the dealers also claimed that their profit margin was affected by the daily change in prices as a fall in the crude prices subsequently leads to fall in retail prices, irrespective of the price paid by the dealer to buy that particular lot of crude.

Dealers claimed that the earlier commission on petrol and diesel of Rs 2.55 per litre and Rs 1.65 per litre respectively, was too low to cover their expenses and make profit amidst operational costs and evaporation of fuel.

“The national average sale per outlet is 170 kilolitres of fuel every month. Assuming this sale, a dealer makes only 14 paise per litre which converts to around Rs 25,000 of profit per month,” Bansal said.