Ever since the US-Israel-Iran war started, oil prices have gone absolutely nuts. Brent crude went from around $74 to roughly $120, a massive 62% jump. Retail fuel prices around the world have also gone up by around 30% in several countries, including Japan and the UK.
But then there’s India, where oil prices are nearly unchanged. So how is India pulling this off? And more importantly, who the hell is paying for it? Also, why are they paying for it? Let’s see.
In India, there are three major oil marketing companies (OMCs), namely Indian Oil Corporation (IOC), Bharat Petroleum (BPCL), and Hindustan Petroleum (HPCL), that control the vast majority of the retail fuel market in India. These three companies are primarily owned by the Indian government, which gives it significant influence over retail fuel prices, unlike in many countries where private companies dominate the energy market.
Reports suggest that these three companies are currently spending around $190–205 million a day just to keep retail fuel prices stable. Yep, $190–205 million every single day. While crude oil prices are going up around the world, these companies are basically eating the extra cost instead of passing it on to consumers. The money they’re using comes from their own reserves, which were originally set aside for things like building processing facilities and expanding distribution systems. Basically, money that was supposed to build something else is now being used to keep petrol prices from going nuts. And experts are warning that if crude oil prices stay high for too long, these companies could start feeling the pain financially, forcing them to borrow more money and rethink where the hell they are spending it.
Another important factor is the timing of the ongoing state elections. Fuel prices directly affect inflation and household expenses, which makes them politically sensitive as hell during election season. Governments generally don’t want to piss people off by suddenly making petrol and diesel more expensive right when everyone is heading to the polls. So, during politically important periods, fuel price increases may be delayed or softened to avoid public backlash and keep inflation from becoming another political headache.
While this current setup offers some temporary relief from rising crude oil prices, the long-term problem isn’t going anywhere. The government has already started encouraging citizens to cut down on fuel usage by working from home, carpooling, or using public transport. Basically, while the government figures out how to deal with the oil-price headache, the rest of us are being told, “Maybe don’t drive so much.” The next few months will be interesting to see how India’s oil pricing game plan changes as international oil prices and local political pressure continue doing their thing.
