Are you paying too much for fuel? Dive into the hidden reality of India's petrol pricing, the impact of excise duties, and whether the E20 ethanol blend is actually saving you money.
The rising cost of petrol in India has long been a source of frustration for citizens. But have you ever wondered why, even when crude oil prices drop internationally, the prices at your local petrol pump continue to climb or remain stagnant at an all time high?
The Crude Oil Paradox:
In 2014, crude oil was priced at $105 per barrel, yet petrol in India was sold for ₹72 per litre. Fast forward to 2026: crude oil costs $96 per barrel—significantly cheaper—yet petrol prices in major cities like Delhi and Mumbai have soared past ₹100 per litre.
The calculation is simply doesn’t add up for the normal man. So, where is the money going?
The Tax Impact:
The discrepancy lies in government excise duty. Before 2014, excise duty on petrol was just ₹9.48 per litre. Following shifts in the global market, the Indian government chose not to pass the savings on to the public. Instead, they increased taxes. In 2020, during the COVID-19 pandemic, when global oil prices crashed by 69%, the government further increased excise duty by ₹10 per litre instead of lowering the retail price.
Is E20 Petrol Part of the Problem?
Now, a new variable has entered the mix: E20 petrol, a blend of 80% petrol and 20% ethanol. Ethanol is a cheaper raw material, at around ₹60-₹65 a litre, but the savings from this mixture are not being fully sold on to consumers. Ultimately, in times of high global prices, the burden is placed squarely on the shoulders of the public, but when oil prices are low, the benefits appear to be diverted elsewhere. Understanding these economic shifts is crucial for every Indian taxpayer.