Petrol prices highest in US in 14 years, but still cheaper than in India

Fuel prices in the US are at a record high but they are still considerably lower compared to rates in India. The average price of a gallon of gasoline (petrol) was $4.31 (approx. Rs 329) on March 10. The week has seen gasoline prices surge to the highest level in 14 years and breach the previous record of $4.11 set on 17 July 2008. Diesel is even more expensive at an average price of $5.05 per gallon.

FUEL PRICE IN US

Fuel is sold in gallons and not in litres in the US. A US gallon equals to 3.78 litre, while the UK gallon, also known as the Imperial gallon, measures 4.54 litre. So, a litre of petrol in the US, on converting the US gallon into litre and dollars into rupees, costs Rs 86.97. That’s cheaper than the prices at which petrol has been sold in India for months.

PETROL RATE IN INDIA

In most Indian cities petrol prices are either above Rs 90 or Rs 100. The price in Mumbai is Rs 109.98 per litre; Rs 95.41 in Delhi; Rs 101.40 in Chennai and Rs 104.67 in Kolkata. The prices have been stagnant since 4 November 2021 after the central government announced excise duty cut by Rs 5 per litre on petrol and Rs 10 per litre on diesel. Most state governments had also decreased local sales tax.

PRICES DIFFER IN US TOO

Even though the US average price is lower than the rates in India, there are places in the US where prices are similar to that in India or even higher. The five most expensive markets (per gallon) in the US are California ($5.69), Nevada ($4.87), Hawaii ($4.81), Oregon ($4.72), Washington ($4.70). On conversion into litres and rupees, the prices are Rs 114.82 in California; Rs 98.27 in Nevada; Rs 97.06 in Hawaii; Rs 95.25 in Oregon; Rs 94.85 in Washington.

But there are also places where petrol is way cheaper than anywhere in India. Petrol is the cheapest in Kansas in the US where the price is $3.81 per gallon (Rs 76.88 per litre). In Missouri and Oklahoma, the price is $3.85 per gallon (Rs 77.69 per litre).

RUSSIA-UKRAINE WAR IMPACT

According to the AAA, the most prominent fuel prices tracking platform in the US, the average price has increased $0.70 (as of 9 March 2022) in the 14 days since the Russia-Ukraine war began. A survey conducted by AAA in February when gasoline was at $3.53 per gallon had found two-thirds of Americans felt gas prices were too expensive. Now that it’s over $4, they are clearly unhappy and that’s reflecting on social media.

PETROL PRICE MAY GO UP

While the Americans complain, Indian consumers are worse off and bracing for a further hike which can make the difference in retail prices between the two nations starker. That’s because the prices in India have been on hold primarily due to the assembly elections in the five states of Uttar Pradesh, Punjab, Uttarakhand, Mizoram and Goa. Now that the results are announced, there is fear prices will begin to rise.

When the price of fuel was put on hold in November, the brent crude price stood at $82.74 a barrel, which has now spiked to near $140 amid the ongoing Russia-Ukraine war. Also, the Rupee is at its weakest nearing 77 against the US dollar, and if it goes down further, it will add to the price burden.

For India, which imports 86% of its crude oil requirements, the problem is grave. The rise in crude oil prices will not just hit the budget of consumers but also significantly dent the government and the RBI’s macro-economic projections. The rise in crude oil price will add to India’s import bills and hurt current account balance apart from stoking inflation.

*Please note, the calculations were made when the Indian rupee was 76.28 against the US dollar. The values in the story will change depending on the fluctuation of the Indian currency.

India Today