Electric vehicles fail to regulate fuel prices

Electric vehicles fail to regulate fuel prices

Every time a Nashikite visits a fuel station, they are burdened with yet another reality. In April 2022, the average price of petrol per litre was Rs 121; a similar quantity used to cost Rs 97 in the same month last year. That is a change of 24% year-on-year. There has been a consistent rise in the fuel prices in the district. Nashik, like the rest of the country, is very dependent upon the commodity. Change in prices is a daily phenomenon affecting businesses and consumers alike. With the rise in sales of electric vehicles (EV), is there any change witnessed in the consumption of conventional fuels?

According to Mr Vijay Thakre, vice-president of the Federation of All Maharashtra Petrol Dealers Association (FAMPEDA), there has been a rise in petrol and diesel prices in the last few days. He points out four major factors that have directly caused a rise in fuel prices, i.e., international crude rate, Rupee devaluation against dollar, central and state taxes and the daily revaluation of fuel rates.

International crude rate

There has been a steady rise in world crude prices. The crude oil indexes (Crude oil WTI) have seen a rise of 65% year-on-year. This rise indicates that purchasing from international markets has got expensive. Factors affecting this spike are plenty, but the ones that top the chart are likely the Russian-Ukraine conflict, the sudden demand for oil as the world gets out of the pandemic endured lockdown, cut down of oil production by oil producing nations.

Devaluation of rupee

Currency depreciation is a fall in the value of a currency in a floating exchange rate system. Rupee depreciation means that the rupee has become less valuable with respect to the dollar. It means that the rupee is now weaker than what it used to be earlier. With respect to crude, devaluation makes imports expensive. Factors such as trade deficits, rebound in oil prices and built up of reserves by the RBI.

Central and state taxes

Petrol and diesel are major sources of taxes for both the central and state governments. Since the inception of GST, the sources of taxes have lessened for the state government. Hence the VAT tax by the state on petroleum products is essential for the state.

Daily rate change

Since June 2017, oil companies announced that there will be a change in petrol prices regularly to align their retail prices more closely with the crude prices and help them taper their losses. This is a good thing to manage for the oil companies but for the end user, there is always a new day to reschedule their budgets.

Electronic Vehicles (EV)

EV sales have picked up in the district. Major reasons for it being the constant rise in fuel prices along with the subsidies provided by the government for their use. But with a lack of infrastructure and charging stations, it would be a Herculean task for its mass success. Mr Vijay Thakre on electric vehicles said, "There has not been a major impact upon the sale of petrol or diesel due to the availability of EV."

(Article By: Aditya Pawar, Intern at Deshdoot Times)

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