Fuel price cut evokes mixed reactions

29 June, 2012

On his first day of additional responsibility of finance department, Indian Prime Minister Manmohan Singh gifted the country with a cut in petrol prices. While the move was welcomed at many quarters, few remained critical about the see-saw effect of the petrol price in the country.

“WHEN THE prices of crude rose in international market, you increase the prices by INR 7. Now when the prices of crude have seen a huge downfall, why can’t you reduce it by INR 10 to INR 30? Why a cut by only INR 3?” The way Mamata Bannerjee spoke to the reporters this morning after a cut in petrol prices, it keeps one wondering whether she is at all a part of the UPA government. ‘Does the lady ever gets happy with anything?’, asked one of the fellow reporters who was following the issue. Mamata added that petrol price cut is due to presidential election and it will go on as soon as the president is chosen.

May not be as pessimistic as UPA’s currently estranged ally, but with inconsistent ups and downs of the fuel prices, the common man echoes the concern too. “This entire thing looks like a mockery. You rise it one day, you decrease it another day. I don’t understand international crude price movement factors, but what about stabilization at a national level?” a Kolkatan told Star Ananda TV.

“Government has reduced the prices by a total of INR 5 after the steep hike of 7 rupees. So effectively it's around a 2 rupee increase. That shouldn’t be difficult to handle. But the way it is going, it scares me whether I can ever plan a budget” said Soumi Ray, a school teacher in Delhi who drives down to her workplace every day.

On a lighter note, one of the tweeple named Laugh_Riot takes a dig at the Congress high command by tweeting, “Petrol price to be reduced by Rs 5/- from today morning 10 AM on account of Italy's final berth in Euro Cup 2012”

While most of the auto companies have cheered the move, many new car buyers are unhappy. “There goes my calculation between a diesel car and petrol car – with prices fluctuating this way, I am not able to decide which car to settle for. Ideally a petrol car should serve my need but after the recent hike, diesel option looked more beneficial but now within a few days I am back to square one”, said Sujay, an executive working with a telecom company.

“The whole thing is so volatile, you have to wait and watch but what we found out that this much of cut which we have introduced yesterday is the one which is sustainable in this highly volatile situation. Another thing that needs to be understood is the fact that we pay the refiners the international prices of gasoline, not crude and gasoline does not necessarily move in tandem with crude. So gasoline price, which came down to USD 94 per barrel has moved up to USD 97 per barrel,” said BPCL chairman, R.K. Singh in an interview to CNBC-TV18.

International crude prices fell by 3% on Thursday giving rise to a situation where this may turn out to be the worst year for crude since 2008. The government surely could have decided for a even higher cut but the volatility in the international market is far from being over. A decrease in price is always welcome by the common man but the increase in price even when absolutely necessary, is met with extreme criticism. Hopefuly the EU summit will manage to find durable solutions to the Eurozone crisis giving a stability to the world economy.