Aam Aadmi Party national convenor Arvind Kejriwal has demanded a steep reduction in petrol and diesel prices, accusing the Centre of denying consumers the benefit of lower international crude oil costs.
Addressing reporters on Thursday, Kejriwal said petrol should be sold at ₹82 per litre instead of the prevailing Delhi price of about ₹102. He also called for a corresponding reduction in diesel rates, which stand at roughly ₹95 per litre in the capital.
Kejriwal alleged that the Centre was allowing oil marketing companies to earn what he described as “illegitimate profits”. He argued that international crude prices had fallen several times during the past decade without producing proportionate reductions at fuel pumps.
“Petrol should be available at ₹82 per litre instead of ₹102 per litre, and diesel prices should also be reduced,” he said. His intervention places retail fuel pricing back at the centre of the political debate following sharp price increases during May and a subsequent easing of global oil benchmarks.
The opposition leader said consumers had borne the burden whenever international prices rose but had received limited relief when costs declined. He questioned why the pricing mechanism appeared to transmit increases faster than reductions and sought greater transparency over refining costs, taxes and company margins.
Petrol in Delhi was selling at ₹102.12 per litre on Thursday, while diesel was priced at ₹95.20. Both fuels rose by more than ₹7 per litre during May as supply disruptions and the conflict in West Asia pushed international crude and refined product prices sharply higher.
The increases ended a prolonged period of largely unchanged retail prices. State-controlled retailers raised rates in stages rather than passing the full rise in international costs to consumers immediately.
Market conditions have since shifted. The benchmark crude basket used by domestic refiners was recorded at about $70 a barrel at the end of June, after reaching substantially higher levels during the West Asia crisis. The decline has strengthened political demands for a reversal of at least part of the May increases.
Retail prices, however, are not determined by crude costs alone. They include refinery and freight expenses, dealer commissions, central excise duty and state-level value-added tax. State taxes vary, producing wide differences in pump prices across cities.
The Centre reduced excise duty on petrol and diesel by ₹10 per litre in March after crude prices surged from around $70 to approximately $122 a barrel within weeks. That intervention was intended to limit the increase passed on to households and transport operators.
The subsequent retail increases reflected continued pressure on oil marketing companies as imported crude remained expensive. The country depends on overseas suppliers for more than four-fifths of its crude requirements, leaving domestic prices exposed to global supply shocks and movements in the rupee.
Financial estimates for the April-June quarter indicate that the three major state-controlled fuel retailers faced heavy marketing losses. Combined losses could reach about ₹47,700 crore, driven by under-recoveries on petrol, diesel and domestic cooking gas.
During parts of the quarter, retailers were estimated to be losing nearly ₹19 on every litre of diesel and about ₹6 per litre of petrol. Domestic liquefied petroleum gas also generated substantial under-recoveries because retail cylinder prices remained below prevailing import-linked costs.
These estimates complicate Kejriwal’s claim that oil companies are earning excessive profits from current prices. Refining businesses can benefit from favourable margins even when fuel retailing operations incur losses, making overall profitability dependent on several segments and accounting periods.
State-controlled retailers also generated strong earnings during earlier periods of subdued crude prices while pump rates remained unchanged. Opposition parties have repeatedly argued that those profits should create room to cushion consumers when market conditions improve.
Fuel taxation has remained another point of contention since 2014. Central excise duty was raised repeatedly when crude prices fell between late 2014 and early 2016, allowing the government to capture much of the benefit through higher revenue. Duties were later reduced in stages as retail prices and inflation climbed.
