Explained: Now that crude oil has become cheap, why not petrol, diesel, LPG and CNG? Why are consumers not getting their rights?

This question comes in the mind of every Indian when crude oil becomes cheaper in the international market, then why do the prices of petrol, diesel, LPG and CNG not decrease in our country? By June 28, 2026, Brent crude had fallen from $ 120 per barrel to below $ 80. Despite the decline of about 30%, the prices of petrol and diesel in India remain the same. To understand the complete mathematics behind this, we need to know what is the cost of making these four things from crude oil and How their price increases manifold by the time they reach the consumer…

1. Petrol: How oil worth Rs 37 gets sold for more than Rs 100

According to Petroleum Planning and Analysis Cell, to understand the price of petrol, we have to look at every stage of it:

• India imports about 90% of its crude oil requirement from abroad. This oil is bought in dollars. If the price of crude is $80 per barrel and one barrel contains 159 liters of oil, then the price of one liter of crude oil is around Rs 50 (when the dollar is worth Rs 83).
• It is important to understand one more thing here that just petrol is not made from one barrel of crude oil. About 72-78 liters of petrol, 38-46 liters of diesel, 8-10 liters of LPG and some other things are produced from one barrel. For this reason, the price of petrol cannot be calculated directly by dividing it by 159.
• It costs about 3-5 dollars per barrel (about 250-400 rupees) to convert crude oil into petrol. That means around Rs 3 per litre. This includes energy consumption, labor and maintenance of the refinery.
• The margin of IOC, BPCL and HPCL oil companies is around Rs 8-11 per liter. The dealer (pump owner) gets a commission of about Rs 4 per litre. Refiners also get a profit of around Rs 4-6 per litre. That means overall around Rs 16-21 per litre.
• The real story begins with taxes. The central government imposes excise duty of about Rs 20 per litre. Apart from this, state governments levy VAT of around Rs 25-30 per litre. The total tax in Delhi is around Rs 28.9 per liter, whereas in Maharashtra it is even higher.
• In June 2026, petrol was being sold at Rs 102.12 per liter in Delhi. That means the price of crude oil was around Rs 50, but taxes and other expenses took it beyond Rs 100. About 40-55% of the total price is just tax.

2. Diesel: Why a little cheaper than petrol?

According to Petroleum Planning and Analysis Cell, the mathematics of diesel price is same as that of petrol, there is only a slight difference:

• About 38-46 liters of diesel is produced from one barrel of crude. The cost of refining on diesel is almost the same i.e. around Rs 3 per litre.
• The Central Government’s excise duty on diesel is around Rs 16-17 per liter, which is slightly less than petrol.
• State VAT is also lower than petrol, because diesel is considered an ‘essential’ fuel. It runs trucks, buses and agricultural machines.
• In June 2026, diesel was being sold at Rs 95.20 per liter in Delhi. In Mumbai it was Rs 97.83.

3. LPG: On which subsidy plays

The mathematics of the price of LPG i.e. cooking gas is slightly different from that of petrol and diesel. According to the report of Investing.com, about 8-10 liters of LPG is produced from one barrel of crude. It also costs money to purify LPG, but its price is determined by the price of LPG in the international market, not directly by crude. LPG prices:

• International LPG Price- Which is decided by the price of crude.
• Ocean freight and insurance- Cost of bringing LPG to India by ship.
• Refining and filling expenses- The cost of filling the cylinder is included.
• Company’s margin- IOC, BPCL, HPCL are taken advantage of.
• Dealer Commission- Gas agency owners also make profits.
• tax- Central and state governments impose taxes like petrol.

Big role of subsidy: The government gives subsidy on LPG. The subsidy on a typical 14.2 kg cylinder is around Rs 420-465. On June 7, 2026, the price of LPG was increased by Rs 29 per cylinder. Under the Ujjwala scheme, a subsidized cylinder is available for Rs 642.

Despite this, LPG is not becoming cheaper because its price is not directly linked to crude. It is determined by the international market price of LPG, which varies separately from crude. Apart from this, the government keeps the tax on LPG low, but it can pass the increased cost on to the consumer by reducing the subsidy.

4. CNG: Which is available at half the price of petrol

Compressed Natural Gas (CNG) is considered a ‘cheap alternative’ to petrol and diesel. CNG is made from natural gas, not crude oil. CNG is made by pressing natural gas. Its price is:

• Price of natural gas- Which is decided by both international market and government control.
• Compression- Cost of making CNG by pressing gas.
• Pipeline and Transport- Cost of transporting the gas to the pump.
• Company’s margin- Benefit of Indraprastha Gas Limited (IGL) and other companies.
• tax- Central and state taxes (but much less than petrol and diesel).

Direct tax on CNG is less. In the eyes of the government, this is ‘environmentally friendly’ fuel. But the price of CNG depends on the price of natural gas, which is different from crude. Still, CNG is cheaper than petrol by about Rs 20 per kg in Delhi. CNG price in Delhi is Rs 83.09 per kg. If there are, then in Bengaluru it is Rs 111.68 per kg. Is.

Why are prices not decreasing despite crude being cheap?

According to the report of Trading Economics, there are 5 major reasons why crude oil is not cheap:

1. Expensive stocks are not over yet: Oil companies do not buy oil in a day. In April-May 2026, when crude was $100-120 per barrel, companies had purchased expensive oil in large quantities. Union Minister Hardeep Singh Puri had said, ‘Companies are still processing the crude oil purchased at expensive prices.’ It takes 30-45 days for cheap oil to reach the refinery.
2. 15 Day Average Formula: While deciding retail prices, oil companies base the average import cost on the last 15 days or one month. If oil suddenly becomes cheaper by 30%, its impact will be gradual on average, not immediately.
3. Tax income to the government: The government gets heavy tax on petrol and diesel. In the financial year 2023-24, the government earned about Rs 7.5 lakh crore from the petroleum sector. If the government reduces taxes, it will have to cut this earning.
4. Rupee weakening: Crude oil is bought in dollars. If the rupee weakens, the value of the dollar increases and imports become expensive. In June 2026, the rupee was around 94-95. If 1 dollar is equal to 95 rupees, then oil worth 80 dollars per barrel costs 7,600 rupees per barrel.
5. Geo-political risk: Oil prices have decreased due to reduced tension in West Asia. But problems like shipping traffic and supply delays in the Strait of Hormuz still persist. Companies are afraid that prices may increase again tomorrow, so they do not reduce prices in a hurry.

So when will the consumer get relief?

According to experts, relief depends on these things:

• If crude remains stable around $80 per barrel and the rupee also remains strong, then there may be some decline in prices in 30-45 days. That too when the expensive stock runs out.
• If the government does not cut excise duty, the relief will be very little.
• Without tax cut, prices are not expected to fall by more than Rs 5-7 per litre.
• The prices of LPG and CNG depend on things other than crude, so there will be no immediate change in them.

For now, consumers will have to be patient and keep an eye on the companies’ decisions in the next few weeks.