The minister said that the deregulation of retail fuel prices, beginning with petrol in 2010, diesel in 2014, and then the shift to daily revision in June 2017, is a consumer-friendly approach, and in their best interests.
"The petrol and diesel prices are skyrocketing".
At present, a consumer pays additional excise duty of Rs 11.77 on every litre of petrol and Rs 13.57 a litre on diesel.
Explaining high fuel prices, Union Petroleum and Natural Gas Minister Dharmendra Pradhan on Wednesday said oil prices in the global market have increased in the last three months due to Hurricanes Irma and Harvey, and assured that it will cool down soon. In Delhi, the VAT (Value-added Tax) levied by state government has gone up 27 per cent from 12.7 per cent earlier.
Similarly, petrol per litre cost Rs 70.38 in Delhi, Rs 73.12 in Kolkata and Rs 72.95 in Chennai while diesel price was Rs 58.72 in Delhi, Rs 61.37 in Kolkata, Rs 62.37 in Mumbai and Rs 61.84 in Chennai.
Terming the spike as temporary, Pradhan said the drop in prices for over a fortnight after the daily price revision was introduced has been ignored and only "temporary" phenomenon of rising trend is being highlighted.
Higher crude prices has been partly responsible for consumer price inflation accelerating at the fastest pace since March to 3.36% from a year earlier. Previously, the rates were changed every fortnight but since June 16 they are being revised daily, Mr. Pradhan said, adding that the daily revision immediately passes on the benefit of any reduction in global oil prices to consumers and avoids sharp spikes by spreading them in small doses.
Though global crude and product prices have been rising for some time, the recent spike has been stoked mainly by fears of product shortage in the wake of hurricanes Harvey and Irma knocking out 13% of U.S. refining capacity.
The excise duty hike resulted in the government's excise mop-up more than doubling to Rs 242,000 crore in 2016-17 from Rs 99,000 crore in 2014-15.
On increase in excise duty on petrol and diesel by the government after it came to power, the minister said that the government needs money to fund the social welfare programmes for the benefit of the common man. The recent price spike is expected to result in enormous gains for oil companies who while charging higher fuel prices also benefitted from lower crude rates as refinery shutdown in United States cut demand for crude oil. "Where do we get resources for these?"