There’s a possibility of gasoline prices to reduce from Nov. 16, being the first cut in nearly three years and the first in the 18 months since the government ended controls.

Reportedly, the price of Gasoline will gown for at least about 1 percent.

The lowering prices in Singapore prices have partially influence to provide a small opportunity for price cuts. Price increases have been unrelenting hikes since the government freed sales in June 2010, sparking political and public outcry. According to sources, if the rupee continues at current levels and if Singapore FOB (free on board) gasoline spot prices continue to average $115.80 a barrel, oil companies may reduce basic prices by at least 60 paise a litre.

Last week, Gasoline prices rose by 1.50 rupees per litre, which amounted to 1.80 rupees per litre due to the addition of local taxes in Delhi. The fourth increase in gasoline prices this year happened due to high inflation. Since early 2009, petrol prices didn’t go down. Also, till June 2010 it was fixed by the government, who still controls other fuel costs.

Due to high and continually increasing nature, petrol has been replaced by diesel widely in the country. In the present scenario, petrol accounts for around 10 percent of fuel demand in the country as compared with about 40 percent for diesel. The increasing gap between the prices of the two fuels has reduced the usage of petrol, and now it is lacking behind diesel in terms of consumption.

The current retail price of petrol amounts for around 68.6 rupees ($1.37) per litre, and an exchange rate of 49.20 rupees to the dollar. In Singapore, gasoline prices are currently averaging at a rate of $115.80 a barrel.

The profitability of the fuel retailers has been hurt as the government is holding back on the issue of raising prices of subsidized fuels such as gasoline, kerosene, and cooking gas despite the global increase in crude oil prices.

Reportedly, due to the government’s holding back on the prices of subsidized fuels, oil firms are likely to suffer a revenue loss of 1.32 trillion rupees on their sales in the current fiscal year ending March 31, 2012.Though the finance ministry on Friday agreed to give a cash compensation of 150 billion rupees to state fuel retailers to partially compensate them for losses on sale of subsidized fuels in July-September, according to two finance ministry sources. Indian Oil Corp, the country’s biggest fuel retailer, and the other two state-run retailers, Bharat Petroleum and Hindustan Petroleum, also reported losses.

Gasoline prices to go down

Report by Indrani Chowdury