Diesel crosses ₹100, petrol over ₹116 in MP:Fourth fuel price hike in May hits consumers hard across state

Oil marketing companies have once again increased petrol and diesel prices within just 11 days. On May 25, petrol prices were raised by ₹2.61 per litre, while diesel became costlier by ₹2.71 per litre. In Madhya Pradesh, prices have increased by as much as ₹3 per litre. Following the latest hike, diesel prices have crossed ₹100 per litre in parts of the state, while petrol prices have gone beyond ₹116 per litre in several districts. According to the revised rates, petrol in Bhopal is now priced at ₹114.65 per litre, while diesel costs ₹99.74 per litre. Among the state’s five major cities, fuel is the most expensive in Ujjain, where petrol is being sold at ₹115.03 per litre and diesel at ₹100.11 per litre. In Indore, petrol costs ₹114.54 per litre and diesel ₹99.57 per litre. Prices have also increased in Jabalpur and Gwalior. Fuel prices increased by nearly ₹8 per litre in 9 days According to the Madhya Pradesh Petrol Pump Dealers Association, the first fuel price hike this month took place on May 15. Since then, this is the fourth increase. Overall, petrol and diesel prices have risen by nearly ₹8 per litre during the last nine days. Timeline of fuel price hikes this month Rising diesel prices likely to impact daily life Experts say the increase in diesel prices could have a widespread impact on transportation and household expenses. Freight costs may rise Truck and transport charges are expected to increase, which could make vegetables, fruits and groceries transported from other states more expensive. Freight charges in Madhya Pradesh may increase within the next two to three days, potentially triggering inflation in everyday commodities. Farming costs to increase Farmers may have to spend more on operating tractors and irrigation pumps, increasing the cost of agricultural production and food grains. Public transport could become costlier Bus fares, auto-rickshaw charges and school transport fees may also rise due to higher fuel costs. Why have petrol and diesel prices increased? The primary reason behind the latest fuel price hike is the fluctuation in international crude oil prices. Before the Iran–United States conflict escalated, crude oil prices were around $70 per barrel. They have now crossed $100 per barrel in the international market. Oil companies have been under pressure due to rising crude prices and are attempting to recover losses through fuel price hikes. Experts warn that if crude oil prices remain elevated for a prolonged period, petrol and diesel prices could rise further. How fuel prices increase before reaching consumers Fuel prices in India are determined based on global crude oil prices and the rupee’s exchange rate against the US dollar. Under the dynamic pricing system, oil companies revise rates daily at 6 am. Before fuel reaches consumers, several taxes and charges are added to the base price. 1. Crude oil cost (Base Price) India imports nearly 90% of its crude oil requirement. The per-litre cost is calculated according to international crude prices. 2. Refining and Company charges Crude oil is processed at refineries to produce petrol and diesel. Refining expenses and company margins are added during this stage. 3. Central government excise duty After refining, the central government imposes excise duty and road cess. These rates remain uniform across the country. 4. Dealer commission Fuel pump dealers receive a fixed commission added to the selling price. Dealer margins differ for petrol and diesel. 5. State Value Added Tax (VAT) State governments levy Value Added Tax (VAT) or local sales tax on fuel. Since VAT rates differ from state to state, fuel prices vary across cities. Madhya Pradesh imposes relatively higher VAT compared to neighbouring states. As a result, petrol and diesel are cheaper in bordering districts of Uttar Pradesh than in Madhya Pradesh. Fuel prices had remained stable since 2024 Petrol and diesel prices had largely remained unchanged since March 2024. Ahead of the 2024 Lok Sabha elections, the government had reduced fuel prices by ₹2 per litre to provide relief to consumers. Although fuel prices in India are technically deregulated and companies can revise prices daily based on the 15-day average crude price, political sensitivities often delay such revisions for long periods. Oil companies reportedly facing heavy losses According to the government, public sector oil companies such as Indian Oil Corporation, Bharat Petroleum and Hindustan Petroleum were facing losses due to elevated global crude oil prices. Petroleum Ministry Joint Secretary Sujata Sharma stated that these companies were suffering losses of nearly ₹30,000 crore every month from the sale of petrol, diesel and LPG. Government had earlier reduced excise duty To maintain stable fuel prices earlier, the government had reduced special excise duty by ₹10 per litre on both petrol and diesel. Excise duty on petrol had been reduced from ₹13 per litre to ₹3, while the duty on diesel was brought down from ₹10 to zero. At one stage, the central government was collecting total excise duty of ₹21.90 per litre on petrol.