From Crude Oil to Your Commute
The price you pay for petrol and diesel is the end result of a long journey. It starts with the global price of crude oil, which is influenced by international supply, demand, and geopolitical events like the ongoing tensions in the Middle East. After
this crude oil is purchased, often months in advance, it's shipped to India—a cost that has itself soared due to higher freight and insurance rates. Once here, it's refined. Finally, central and state government taxes, such as excise duty and VAT, are added. This combination of crude cost, shipping, refining, and taxes determines the final retail price that directly impacts your daily budget.
The Squeeze on Public Transport
For the millions who rely on public transport, rising fuel costs often translate to higher fares. Diesel is a major operational expense for both state-run and private bus operators. A recent surge in diesel prices, for example, was projected to add a significant annual burden to state transport utilities, making fare hikes seem almost inevitable. In Kerala, operators of inter-state buses and local stage carriers have warned that they have little choice but to pass the burden onto commuters, citing not just the cost of diesel but also rising prices for tyres and spare parts. Autorickshaw and taxi unions are also frequently forced to demand fare revisions to cope with the increased running costs.
Your Cab Ride Could Cost More
Ride-hailing services like Uber and Ola are not immune to these pressures. When fuel prices rise, drivers' operating costs increase, reducing their take-home earnings. To manage this, these platforms often adjust their fare structures or introduce fuel surcharges to help drivers cope. For frequent users, this can mean a noticeable jump in their monthly travel expenses. A recent survey found that in response to fuel hikes, 29% of Indian consumers planned to shift to lower-cost transport options, including vehicle pooling or cheaper app-based services, highlighting how directly these costs influence commuter behaviour.
Will Your Holiday Flights Be Pricier?
The impact of oil prices extends into the sky. Aviation Turbine Fuel (ATF), or jet fuel, is one of an airline's biggest expenses, often making up about a quarter of its operating costs. When crude oil prices surge, the cost of jet fuel follows, and airlines typically pass this on to passengers through higher ticket prices. This is especially true for long-haul international routes that consume a large amount of fuel. While strong demand for travel can sometimes help airlines absorb a portion of these costs, sustained high fuel prices often lead to fare increases or the introduction of fuel surcharges, making that vacation you're planning a bit more expensive.
Smart Ways to Soften the Blow
While you can't control global oil markets, you can adopt smarter habits to reduce the impact on your wallet. A survey showed that 71% of Indian consumers intended to cut down on non-essential travel due to fuel costs. Beyond that, consider making public transport your primary mode of travel. For those who drive, carpooling or sharing a cab with colleagues can significantly reduce individual fuel expenses. Adopting fuel-efficient driving habits—like avoiding sudden acceleration and braking—and ensuring your vehicle is well-maintained can also make a difference. For shorter distances, two-wheelers are more cost-effective than cars, and for daily commutes under 40 km, electric scooters are emerging as an economical long-term solution, with running costs significantly lower than their petrol counterparts.
