Oil companies calculate the desired retail selling price of petrol and diesel on 1st and 16th of every month based on average international benchmark price and rupee-dollar exchange rate.
Average benchmark gasoline rates have increased from USD 109.25 per barrel in second half of August to USD 111.04 in September. Exchange rate has averaged Rs 60.54 to a US dollar in September as compared to Rs 60.73 to a dollar in second half of August.
The combined effect of this should have resulted in an increase of 54 paisa a litre in price of petrol, but state- owned oil companies are holding on to the rates, the official said.
The next revision in diesel and petrol prices is due at the month end.
Once the Cabinet approves de-regulation or freeing of diesel prices, oil companies can change rates in tandem with cost like they have been doing in case of petrol since June 2012.
The NDA government has continued with the previous UPA regime’s policy of raising diesel rates by up to 50 paise a litre every month to bridge the gap between cost and retail prices.
Originally, petrol and diesel prices were deregulated in April 2002 when NDA government was in power. Administered pricing regime, however, made a back-door entry towards the end of NDA regime in the first quarter of 2004 when crude prices started inching up.
Congress-led UPA controlled rates as international oil prices went through the roof. In June 2010, however, it freed petrol price from its control and rates have since them moved more or less in tandem with cost.
In January 2013, the UPA decided to deregulate diesel prices in stages through monthly 50 paise a litre increases.
Rates were last raised on August 31 after which losses have dipped.
Rates have cumulatively risen by Rs 11.81 per litre in 19 instalments since January 2013.