Petrol and diesel prices in Bengaluru have gone up by a rupee this past week, following hostilities between Iran and the US.
Neelakanta Byanna, owner of fuel station Coles Road Service, says depreciation of the Indian rupee also adds to the cost of fuel. “After Trump’s speech calling for peace, the dollar price fell by Rs 3,” he told Metrolife.
India imports 84 per cent of its oil, about 60 per cent of it from the Middle East. Crude oil, priced at 65 dollars a barrel (about 159 litres), rose to 70 dollars immediately after the US killing of the Iranian commander Qasem Soleimani on Friday.
K M Basave Gowda, president, Akhila Karnataka Federation of Petroleum Traders (AKFPT), a body with 4,500 traders under its umbrella, says India is the biggest buyer of oil from Iran. “Because of the Iran-US tensions, prices have gone up by Rs 1.50 to Rs 2 in over the past week,” he says.
Prices of petrol and diesel vary from one city to another because of additional charges and taxes. “The US is also one of the biggest sellers of oil and they have maintained a standard rate. But, in terms of proximity, Iran is closest to India,” he says.
Tarun Prakash, the owner of East End Service Station on Wheeler Road, has noticed a general reduction in the consumption of diesel. “This could be because of multiple reasons, including a reduction in the purchasing power of people,” he says.
No differential rates
Ramaiah N, owner of a petrol pump on Hennur Cross, says the price fluctuations have not affected consumption adversely. “Petrol and diesel are essential items,” he says.
Jagannath, manager of GBS Reddy petrol pump near Seshadripuram College, says people are stocking up, fearing a rise in prices. “They are going in for full tanks,” says Jagannath.
Consumer takes
Arif Arshad, owner of TOB Farms, grows, sells and supplies organic products to shops across the city. His fields are located in Devanahalli.
“We have four big vehicles and eight two-wheelers and we have to bear the escalating cost of petrol and diesel,” he says. Some in the IT sector, like Abhishek Sircar, product manager in Syniverse, work from home, and the price fluctuations don’t upset their budget too badly. “I drive a petrol car and my monthly expenses don’t exceed Rs 7,000,” he says.
Economist’s view
Indirajit Bairagya, assistant professor, Institute for Socio-Economic Change, Bengaluru, says changes in petroleum prices impact all sectors of the economy. “When fuel prices go up, there is inflation, a rise in prices. And the purchasing power of people comes down. When the price of products goes up and incomes remain constant, people buy less. Unless incomes also rise at a similar ratio, people will not have the same purchasing power,” he says.
Indirajit says the Indian economy is trying to sort out problems on the supply side. “Policymakers are trying to promote certain products and industries. But at the end of the day, who will buy those products when there is a problem with effective demand? Only if there is a market for your product will investors be encouraged to invest in it. If they invest and are unable to sell, they won’t come back. Nobody can deny the importance of the consumption expenditure of an economy,” he says.
Prices in Bengaluru
Before US killing of Iranian Commander Qasem Soleimani
Petrol: Rs 77.64
Diesel: Rs 70.25
Globally a barrel of crude oil costs between $50 and $52
After US killing of Soleimani
Petrol: Rs 78.22
Diesel:Rs 71.12
Globally a barrel of crude oil costs between $60 and $62
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