Entries over last 16 years reveal that while Indian governments (whether BJP or Congress-led) have not really passed on the benefits of steep crude price declines, they have also cushioned the shock of steep rises
Every now and then, someone in the family will ask, so why are you writing down those numbers?
Yes: every time we buy petrol, I note down five things about the purchase: the date, the odometer reading, the number of litres, the total price, and the price per litre. All this, in a pocket diary we keep in the car. So far, we’ve filled 36 pages—in pencil, in blue, black, red and (once) orange ink. At about 14 entries on each page, that’s well over 400 times that we’ve bought petrol. No, I don’t want to think about how many rupees we’ve spent on the stuff.
But why do it? One reason is to track our car’s fuel consumption. This is how I know that we get 8-9km per litre (kmpl) of petrol in city driving, and sometimes as much as 20kmpl on our many long-distance forays—over the years, to Goa, Delhi, Bengaluru, Pachmarhi and Kanpur.
Yes, years. I’ve noted these numbers since August 2004. Which brings me to the other motivation to do this: in that diary is a record of petrol prices stretching back over 16 years. So today, as the price per litre touches the three-figure mark in parts of India, it’s a good time to flip those pages and see if they tell a story. Or stories.
First a caveat: the three-figure mark is just another number. There’s nothing significant about the price getting there, apart from the psychological mystery we attach to the number 100.
But that apart: if I am paying almost ₹100 for a litre of petrol today (my last purchase, two weeks ago, cost me ₹98.31 per litre) and, in fact, if others are already paying that price, how does it compare to what I paid six months ago? A year ago? Five years ago? Ten? 16?
Let’s quickly run through those, but in reverse so we can better see trends. 16 years ago, in February 2005, I paid ₹44.50 per litre. 10 years ago, February 2011, ₹63.10. Five years ago, February 2016, ₹65.73. A year ago, February 2020, ₹77.60. Six months ago, in July 2020, near enough, ₹87.14 a litre.
Put those numbers in perspective: a litre of petrol costs over twice as much today as it did 16 years ago. 50% more than 10, or five, years ago. ₹20 more, or 27%, than a year ago. Over ₹10 more, 13%, than six months ago.
At first glance, this is a broadly straightforward increase. Doubling over 16 years means about a 5% increase annually, which is about what you might expect of inflation in this country. But this first glance glosses over what a closer look might reveal. For example, the price rose by nearly 50% between 2005 and 2011 - about 7% annually. It rose barely at all over the next five years. Then a nearly 20% increase till February 2020, or 4.7% annually. But in the year since then, a 27% climb.
That is, petrol prices ran slightly ahead of inflation from 2005 till 2011, then stayed more or less stagnant till 2016, then probably lagged behind inflation till 2020, and have been rising at their steepest pace over the last year.
Yet, breaking down the trends even this much still doesn’t tell all the stories there are. Like: what happened during the worldwide economic bust of 2008? Well, at the start of 2008, I paid ₹48.38 for a litre of petrol. Six months later, the price had risen to ₹59.04. With the downturn over the second half of that year, the price dropped, too. When I filled up for the last time that year, in December, I paid ₹49.80—pretty much the same as at the beginning of 2008. And that decline continued. In June 2009, the price was almost at its lowest in these 16 years: ₹44.50.
You see, there’s plenty to note in my diary. But let’s turn to what’s happening as petrol touches ₹100: the political finger-pointing that’s breaking out all over. Like: the price increased much more under the Congress than under the Bharatiya Janata Party (BJP)! Like: where are Smriti Irani, Amitabh Bachchan and Akshay Kumar, so vocal about petrol price rises under the Congress, but silent now?
So yes, how did the price trend during Congress rule, and during BJP rule? Take 2004 to 2014, the decade of the Congress-led UPA (United Progressive Alliance) coalition. The price of petrol rose from ₹44.90 (August 2004, my earliest record) to ₹89.54 when the BJP swept to power (mid-May 2014). In 10 years, that’s almost exactly double, or 7.1% annually. Compare that to a rise of 10%— ₹89.54 to ₹98.31 —in the last seven years of BJP rule. So, by this first glance, the BJP has done far better in controlling the price of petrol.
But again, let’s dig a little deeper. In the first two years of BJP rule, petrol dropped from ₹89.54 to ₹66.11 (mid-May 2016). Kudos to the BJP for that marked decrease. But since May 2016, the price has risen steadily, with occasional hiccups, to ₹98.31 today. That’s a 50% increase in five years, or 8.3% each year. That’s comfortably higher than the annual increase under the UPA; the exclamation point is the 27% increase over the last year.
Too many numbers, I know. As always, analysing numbers runs the risk of losing my audience. But bear with me through just a few more.
What such examinations must finally account for, since most petrol in India is refined from imported crude oil, is the price we pay for crude oil. While I didn’t record that, historical data is available all over the web (e.g. here: bit.ly/3dGOLKt). What’s its story over the last 16 years, and how does it match what we’ve paid for petrol?
Some quick glimpses: In August 2004, crude oil was at $50 per barrel, petrol at ₹44.90. In July 2008, $147 (an all-time high) and ₹59.04. So, in the first four UPA years, crude prices tripled; petrol increased by a third.
In January 2009, $34 and ₹52.80. So through the economic crash of 2008, crude tumbled to a fourth of its peak; petrol decreased by just 10%.
In May 2014, $101 and ₹89.54. So, in the second UPA term, crude tripled again; petrol rose by 70%. From that month, crude prices fell steadily for almost two years: February 2016, $27 and ₹65. So, in the BJP’s first two years, crude fell to a fourth of the May 2014 price; petrol by 30%.
A rise again: October 2018, $77 and ₹87.80. Again a near tripling in crude price; petrol rose by 35%. From that month, crude prices dropped for 18 months: April 2020, $19 and ₹76.25. Yet again, crude dropped to one-fourth of the October 2018 price; petrol by 13%. Today, almost a year later: crude is at $64 and petrol at ₹98.31. Crude has more than tripled, petrol has risen by 29%.
What’s the story, if any? From where I’m sitting, this: historically, crude prices swing back and forth dramatically. While Indian governments (whether BJP or Congress-led) have not really passed on the benefits of steep declines, they have also cushioned the shock of steep rises.
Put another way, fans of both parties may be better off finding other sticks to beat each other with.
Once a computer scientist, Dilip D’Souza now lives in Mumbai and writes for his dinners. His Twitter handle is @DeathEndsFun
Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.
Never miss a story! Stay connected and informed with Mint.
our App Now!!