The petrol and diesel prices have gone through the roof ever since the central government announced daily revision of fuel prices.
India relies on imports to meet 80% of its needs and so domestic fuel rates have been aligned to the movement of equivalent product prices in the global market since April 2002. Similarly, the price of diesel is at a three-year high in the metro cities of Kolkata and Chennai at Rs 61.37 and 61.84 per litre respectively.
The government can not change fuel prices on a knee-jerk basis, Petroleum Minister Dharmendra Pradhan said on Wednesday on a day when stocks of state-run oil marketing companies (OMCs) tanked by as much as eight per cent following recent hikes in transport fuel prices.
Meanwhile, due to the daily revision price policy, petrol in Mumbai on Wednesday cost Rs 79.48 a litre.
The additional excise duty refers to an aggregate increase in the indirect tax imposed by the NDA government on petrol and diesel from November 2014 to January 2016 in eight instalments to gain from the falling global crude oil prices.
The Minister said that hurricanes like "Irma" and "Harvey" in United States had significant impact on the fuel supply and that is the reason behind the increase in its prices. The recent price spike is expected to result in enormous gains for oil companies who while charging higher fuel prices also benefitted from lower crude rates as refinery shutdown in USA cut demand for crude oil.
The news reports brought back the ghosts of the era of regulation, when petrol and diesel price movements were much hyped events with the government dictating how much the oil refining and marketing companies could charge.
"The government can not change fuel pricing on a knee-jerk basis", Pradhan told reporters here, noting that global crude oil prices had recently gone up as much as 15 per cent owing to production being hit in the USA owing to the impact of multiple hurricanes.
He, however, remained non-committal on cutting taxes to soften the blow of the relentless rise in prices since the government need to finance huge infrastructure and social projects has to be balanced with consumer needs.
Daily revision allows any fall in worldwide oil rates to be passed on to consumers immediately rather than having to wait for 15 days as in the old system, he added.
He said the global prices of petrol and diesel have recently gone up by 18 per cent and 20 per cent, respectively.