Why Petrol Isn't Getting Cheaper Despite Falling Crude Oil Prices: Kejriwal vs Centre Explained

Arvind Kejriwal’s attack on fuel pricing has brought India’s petrol and diesel rates back into the political spotlight. The Aam Aadmi Party has accused the Centre of allowing oil companies to retain high margins even after global crude prices cooled from earlier peaks. The party has argued that petrol should be closer to ₹82 a litre, or lower, if the fall in crude oil were fully passed on.

The criticism came on Thursday, July 9, as pump prices in major Indian cities remained unchanged. Kejriwal, the former Delhi chief minister and AAP national convener, questioned why petrol continued to sell at over ₹100 a litre in several cities despite lower international crude prices and the wider use of ethanol-blended fuel.

AAP questions petrol price gap despite lower crude oil

AAP’s central argument is that consumers have not received adequate benefit from the moderation in crude oil prices. The party said Brent crude had fallen from around $115 a barrel at earlier highs to much lower levels. It claimed that if this reduction had been reflected properly, retail petrol prices would not have remained near current levels.

According to the party’s position, the high retail price is not only a market issue but also a policy choice. Kejriwal questioned why petrol continued to sell at around ₹102 a litre in Delhi, saying the price was similar to the level fixed by the government in May this year. He also linked the issue to E20 petrol, asking why prices had not softened despite greater ethanol blending.

On July 9, Brent crude was around $79.25 a barrel, higher than the previous morning’s level by about $1.08. It was also about $8.30 above its level a year earlier. This means crude prices have not moved in a straight line. However, AAP’s political point is that the broader fall from past highs has not translated into visible relief at fuel stations.

Petrol and diesel prices in major Indian cities

Retail fuel prices vary across states because of local taxes, dealer commissions and freight costs. Delhi usually has lower fuel prices than several other metros, while cities such as Mumbai, Hyderabad, Bengaluru and Kolkata often see higher pump rates. On July 9, there was no change in petrol or diesel prices across key cities.

The figures show why fuel prices remain politically sensitive. Petrol is above ₹100 a litre in all these major cities, while diesel is close to or above ₹100 in several markets. For households, transporters and small businesses, even a modest cut can affect monthly expenses, freight charges and operating costs.

Why crude oil and pump prices do not move together

Petrol and diesel prices in India are influenced by more than the headline crude oil rate. The final retail price includes the crude cost, refining margins, freight, dealer commission, central excise duty and state value-added tax. A change in crude oil prices does not automatically lead to an equal change at the pump.

Another factor is the pricing strategy of oil marketing companies. In periods of sharp global volatility, companies may absorb losses or hold prices steady to avoid daily shocks for consumers. Later, they may recover margins when crude prices soften. This is the reasoning often used by the government when it resists immediate reductions.

Union Petroleum Minister Hardeep Singh Puri has previously said the government was not considering a cut in petrol and diesel prices. He has argued that oil companies were still dealing with the impact of costlier crude purchased earlier. The ministry’s broad position has been that pricing must consider inventories, market volatility and the financial position of oil firms.

Opposition parties reject that explanation. Their argument is that consumers were asked to bear high prices when crude was expensive, but were not given proportionate relief when prices fell. AAP’s latest criticism follows that line and seeks to frame high fuel prices as a burden created by government policy, taxation and corporate margins.

E20 petrol adds another layer to the price debate

Kejriwal’s reference to E20 petrol is significant because India has been promoting petrol blended with 20 per cent ethanol. The government says ethanol blending reduces crude import dependence, supports sugarcane and grain-based ethanol production, and helps lower emissions. The programme has been one of the Centre’s flagship energy-transition measures.

However, consumers often judge the policy through pump prices and vehicle performance. If ethanol blending lowers dependence on imported crude, many expect some price benefit. The government has not presented E20 as a direct fuel-price subsidy. Its benefits are framed more around energy security, farm-sector support and lower emissions than immediate retail price cuts.

The fuel-price debate also has a fiscal dimension. Central and state taxes make up a substantial part of retail petrol and diesel prices. Any significant cut can reduce government revenue. This is why fuel pricing often becomes a dispute between the Centre, states and opposition parties, especially when elections or inflation concerns are in focus.

For consumers, the practical question is simpler: whether pump prices will fall if crude remains below earlier highs. At present, there is no official indication of an immediate reduction. AAP’s charge has increased political pressure, but any actual relief will depend on government policy, oil company pricing decisions and the direction of global crude prices in the coming weeks.