New Year to see higher petrol prices

Petrol prices are certain to go up with the New Year – the only question is by how much. Reports suggest anywhere between Rs1.5 and Rs2.5 a litre, as the state-run oil companies meet today to deliberate the matter.

This follows a Rs1.75 per kg hike in the price of compressed natural gas in Delhi. This gas is mainly used by public transport vehicles.

The hikes become inevitable in the face of the record slide of the rupee over the last several months. The average exchange rate in first fortnight of December (when the retailers last reviewed prices) was Rs51.98 a dollar, and it has slipped further since then.

Oil marketing companies revise petrol prices every two weeks - but in the 15 December review, the government told the firms to avoid a price increase as it could cause uproar during the winter session of Parliament.

As a result, the price rise could be even steeper, some observers expect. Others suggest that with the Congress facing elections in five states soon, the leading party of the United Progressive Alliance would again oblige the marketing companies to moderate the price increase.

The government continues to strictly keep down the prices of diesel, domestic cooking gas and kerosene, which have always been sold way below cost.