Why Fuel Prices Soar: Unpacking Crude Oil, Refining Costs, and Heavy Taxes

• Crude oil costs approximately $65 per barrel (Rs. 5,980), translating to about Rs. 37.60 per liter.
• One barrel of crude yields around 170 liters of various products, including 72-78 liters of petrol and 38-46 liters of diesel.
• Refining a barrel of crude costs only $3-$5 (approx. Rs. 450), which is about Rs. 3 per liter, with refineries making Rs. 4-6 profit per liter.
• Post-refining costs like transportation, storage, and Oil Marketing Company margins add Rs. 14-17 per liter, plus Rs. 4 dealer commission.
• The primary drivers of high fuel prices are central excise duty (Rs. 20/liter) and state VAT (Rs. 25-30/liter), pushing prices over Rs. 100.

Why It Matters: High fuel prices are driven by taxes, not just crude cost or refining, despite low international crude rates.