The Hindu Business Line : Oil at $100 has Govt mulling options on price hike

New Delhi, Jan. 3 Untamed global crude prices that hit $ 100 a barrel on Wednesday may force the Government to take immediate decisions to ease out the losses being suffered by state-owned oil marketing companies. The Petroleum Minister, Mr Murli Deora, today acknowledged that “it is a cause for concern. Price hike (of auto fuel) is not the only solution. There are other options such as excise duty cut that have been suggested by the Left allies. We have got to find the best solution.”

“A Group of Ministers on prices, including fuel prices, will meet shortly and will consider the other options,” he told newspersons here on Thursday. A decision on whether to raise retail selling prices of petrol and diesel or resort to other options would probably be taken later this month.

Global oil prices have softened after leaping to the anticipated high of $100 a barrel on Wednesday on concern that violence in Nigeria may disrupt supply as global demand for commodities rises. The Indian crude basket touched an all time high of $ 92.29 a barrel on Wednesday. The basket averaged $ 87.92 a barrel in December. India imports two-thirds of its crude oil requirements.

Focus on conservation

The Petroleum Minister said “we need to tighten our belts and curb consumption of oil.” The Government would also focus on oil conservation as an answer to crude oil prices, he said.

The retail selling price of four petroleum products – petrol, diesel, cooking gas (LPG) and PDS kerosene, in India is controlled and the OMCs are not allowed to revise the prices in line with international trends. The soaring crude prices have triggered fears of more under-recoveries for OMCs. Mr Deora said that he had talks with Left leaders including Mr Sitaram Yechury of CPI-M late last week. “The Left parties are very cooperative. They have said they will assist in finding a solution to the present crisis,” he said.

The OMCs – Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation – are expected to lose Rs 69,753 crore on sale of petrol, diesel, domestic LPG and PDS kerosene this fiscal. Petrol is being sold at a loss of Rs 9.20 a litre, diesel at Rs 10.95 per litre, kerosene Rs 19.90 a litre and LPG at a loss of Rs 331.35 per cylinder.