Fuel Price Mystery Solved: Taxes, Not Refining, Drive Rs 100/Litre Cost
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News18•27-01-2026, 17:54
Fuel Price Mystery Solved: Taxes, Not Refining, Drive Rs 100/Litre Cost
- •Despite moderate global crude oil rates ($65/barrel), retail fuel prices in India approach Rs 100/litre, raising consumer questions.
- •The base cost of crude oil is Rs 37.6/litre, but refining adds only about Rs 3/litre, covering energy, labor, and maintenance.
- •Refining a barrel of crude yields approximately 170 litres of petroleum products, including petrol (72-78L) and diesel (38-46L).
- •Refining and transportation add Rs 6/litre, while oil marketing companies and dealers add Rs 8-11/litre and Rs 4/litre respectively.
- •Government taxes (excise duty and state taxes) are the largest component, adding Rs 40-50/litre to petrol and Rs 35-40/litre to diesel.
Why It Matters: High fuel prices are primarily due to government taxes, not refining costs or crude oil rates.
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