The significant fall in global crude oil prices following the interim peace deal signed between the US and Iran should have been welcome news for millions of Indian consumers. Brent crude, which traded at around $72 a barrel before the Iran war, had surged to about $126 a barrel as fears of supply disruptions through the Strait of Hormuz sent shockwaves across global energy markets. As of date, with shipping lanes functioning smoothly, Brent crude has retreated to its pre-war level of around $72 a barrel. Yet, Oil Minister Hardeep Singh Puri said on 2 July that retail petrol and diesel prices are unlikely to be cut anytime soon as state-run refiners are still processing costlier crude purchased during the peak of war. “A fuel price cut can be looked at if oil prices remain at low levels for a sustained period,” Puri argued. In contrast, Nayara Energy, India’s largest private fuel retailer, cut petrol prices by Rs 5 per litre and diesel by Rs 3 per litre following the cooling of global crude prices.
During the West Asia war, retail petrol and diesel prices in India increased by nearly Rs 7.50 per litre in a series of four phases starting from 15 May 2026, to pass on the rising global crude oil costs to consumers. We, as tame citizens, eagerly accepted this increase without a whimper. On the other hand, speaking up for lower fuel prices may well amount to treason and could put the questioner at risk of being labelled anti-national.
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India’s fuel pricing policy, wholly controlled by the government, is getting all too predictable. Whenever international crude prices rise, consumers are immediately told that higher pump prices are inevitable because India imports nearly 85 per cent of its crude oil requirements. But whenever crude prices decline sharply, the same market logic mysteriously disappears. Relief for consumers becomes conditional, delayed or altogether absent.
Deregulation was meant to ensure that domestic fuel prices reflected international market movements in both directions. Contrary to this, India has evolved a system where global price increases are passed on to consumers swiftly, while price declines are conveniently absorbed by the state exchequer or oil marketing companies, leaving consumers high and dry. This is certainly not deregulation; it’s exploitation.
Adding insult to injury, the government mandated 20 per cent ethanol blending with petrol on 1 April, during the peak of the war, despite widespread outrage among four-wheeler and two-wheeler users over the negative impact of ethanol on both fuel efficiency and engine health. Social media platforms these days are flooded with videos posted by motorists on the adverse effects that the E20 ethanol programme is having on their vehicles. Most people claim their vehicles have witnessed a drastic fall in mileage and engine wear and tear ever since E20 petrol was mandated. Independent studies have indicated that older vehicles which have not been designed for higher ethanol blends, like those made before 2023, are likely to experience corrosion of fuel system components and accelerated engine wear over time.
While controversy over E20 refuses to die down, the government is planning to go ahead with blending of 15 per cent isobutanol with diesel. If this too is mandated without proper scientific assessment, it could spell doom for the country’s economy. This is because diesel powers India’s freight movement, agriculture, public transport and industrial logistics. Before expanding alternative fuel mandates, the government must place in public domain comprehensive test results, clearly define vehicle compatibility and ensure consumers are not left in the lurch.
The government has been aggressively promoting ethanol blending in the name of reducing the country’s fuel import bill, lowering emissions and improving sugarcane farmers’ income. In all likelihood, the government is going to save on its import bill, while the entire ethanol ecosystem, mainly comprising political families of the ruling party, ordinary sugarcane farmers and ethanol manufacturers, is already benefiting. Sadly, the consumer is being forced to pay for all this. On the other hand, the environmental impacts and intense water needs for sugarcane farming are a whole different conversation.
With the government refusing to roll back recent hikes in fuel prices, the drop in mileage and engine performance of vehicles in the wake of the ethanol blending has come in as a double whammy for most motorists. It seems the government is on a mission to pass on all burdens to the common man and reward industrialists and politicians with gifts. Interestingly, while the blame is being heaped on the Road Transport Minister Nitin Gadkari, whose son is a big ethanol producer, everyone is conveniently forgetting the Petroleum Minister Hardeep Singh Puri, whose ministry is primarily doing the job of mixing ethanol with petrol. This inter-ministerial coordination must have obtained the go-ahead from the Cabinet. That makes everyone culpable.
