The Oil ministry said that, due to the increasing crude oil prices in the international market, the government can no longer afford to inflate its import bill. The excess cost has to be passed on to the customer as the oil companies can no longer sustain losses. This means that the already fleeced common man will have to shell out more per litre of petrol.
Finance minister Pranab Mukherjee has urged the state governments to reduce their taxation on petroleum. For every rupee rise in crude oil costs, the end cost increases by about two rupees. If the states reduce taxation, the impact of the fuel price hike could be subdued.
Petrol prices have been steady for last 2-3 months and another price hike could spell doom fo rthe already unstable Central government.
