'Petrol Should Cost ₹82, Not ₹102': Arvind Kejriwal Explains His Fuel Price Calculation

Aam Aadmi Party national convener Arvind Kejriwal has stepped up pressure on the Centre over fuel prices, arguing that petrol should be sold at around Rs 82 a litre after the fall in global crude oil prices. Addressing a press conference on Thursday, July 9, 2026, the former Delhi chief minister said consumers were not getting the full benefit of lower crude costs.

Kejriwal said the calculation should be based on regular petrol, not E20 petrol, which contains 20% ethanol. He claimed that if the fuel being sold is E20, the retail price should be even lower because ethanol blending changes the cost structure. His remarks come at a time when high fuel prices remain a politically sensitive issue for households, transporters and small businesses.

Kejriwal’s petrol price calculation

According to Kejriwal, crude oil at around $70 a barrel works out to roughly Rs 42 per litre after conversion into rupees. He said this should be the base cost before adding taxes, oil marketing company margins, freight charges and dealer commission. He argued that even after keeping existing taxes unchanged, petrol should not be selling near current levels.

He placed oil marketing company margins and transport costs at around Rs 9 per litre, central taxes at Rs 12 per litre, average state VAT at about 25%, or Rs 16 per litre, and dealer commission at Rs 3 per litre. Adding these components, he said, brings the retail price of regular petrol to around Rs 82 per litre.

Kejriwal said the public had a right to know why petrol continued to cost more when crude prices had softened. “The price of pure petrol should be Rs 82 per litre, not E20 petrol,” he said, according to the details shared at the press conference. He further claimed that E20 petrol could be priced closer to Rs 70 per litre.

Fuel prices in India are not decided by crude costs alone. They also include refining costs, oil company margins, dealer commission, central excise duty and state-level value-added tax. In some states, local levies can significantly change the final price paid by consumers. This is why petrol and diesel prices differ across Delhi, Mumbai, Chennai, Kolkata and other cities.

Why fuel prices matter beyond petrol pumps

Kejriwal linked lower petrol and diesel prices to broader relief from inflation. He said cheaper fuel would reduce transport costs and could soften prices of essential goods, including food items. Diesel is especially important for goods movement, agriculture, logistics and public transport, making its price a key input in the wider economy.

When fuel prices remain high, transporters often pass on higher operating costs to traders and consumers. This can affect vegetables, grains, packaged goods, construction material and services. The impact is not always immediate or uniform, but fuel is one of the costs that influences supply chains across both urban and rural markets.

The Centre has previously argued that fuel taxes help fund infrastructure and welfare spending, while states also depend on VAT from petrol and diesel for revenue. Any reduction in fuel taxes can therefore affect government finances. However, opposition parties have repeatedly said that high taxes prevent consumers from receiving the benefit of lower international crude prices.

India follows a market-linked pricing system for petrol and diesel, but tax policy continues to play a large role in retail prices. Oil marketing companies review prices based on international product rates, currency movement and other costs. The rupee-dollar exchange rate is also important because crude oil is priced globally in dollars.

E20 petrol and the pricing debate

Kejriwal’s reference to E20 petrol is significant because India has been expanding ethanol blending to reduce oil import dependence and support domestic ethanol production. E20 fuel contains 20% ethanol and 80% petrol. The government has promoted ethanol blending as a way to cut emissions, save foreign exchange and create additional demand for agricultural produce used in ethanol production.

However, the pricing of blended petrol is a complex issue. Ethanol procurement prices, blending logistics, oil company costs, vehicle compatibility and taxation all influence the final retail price. Consumers often focus on pump prices, but mileage, fuel efficiency and vehicle type also matter when comparing regular petrol and blended fuel.

Kejriwal’s demand places the political focus back on transparency in fuel pricing. His argument is that the public should see a clear link between falling crude oil prices and retail fuel prices. The Centre has not issued an immediate response to his latest remarks at the time of writing.

The AAP chief also said diesel prices could be reduced using a similar approach. He argued that the government had room to cut prices without changing every tax component. Diesel prices are watched closely by farmers, truck operators, small manufacturers and logistics companies because they directly affect operating expenses.

Kejriwal, a former Indian Revenue Service officer, has often used tax and pricing arguments in political campaigns. He studied mechanical engineering at IIT Kharagpur and later served in the Income Tax Department before resigning from government service. He entered public life through anti-corruption activism and later became one of the founders of the Aam Aadmi Party.

The fuel price debate is likely to continue because it affects almost every household budget. For consumers, the key question is whether lower crude oil prices will translate into lower pump prices. For governments, the challenge is balancing revenue needs with pressure to ease inflation and reduce the cost of daily living.