Ever wondered why petrol and diesel prices change every morning? In India, a dynamic fuel pricing system updates prices daily at 6 AM, aligning with international crude oil fluctuations. Three major public-sector oil companies - Indian Oil, Bharat Petroleum, and Hindustan Petroleum - control nearly 90% of India’s fuel market.

First, India imports crude oil, paying for its price, import duties, customs, and freight costs. Once it reaches Indian shores, the oil is refined into petrol and diesel, with a cost called the Refinery Transfer Price. Then, oil marketing companies add margins and inland freight to get the depot price.

Next comes the tax burden. The central government’s excise duty, the state government’s VAT, and the dealer’s commission are all added on top. This final tally becomes the price you see at the petrol pump.

Since India imports 84% of its crude oil, any rise in global prices or a weaker rupee directly impacts what you pay. That’s why prices change daily under the 2017 “dynamic pricing” model, replacing government-fixed rates.

So next time you see a change at the fuel station, you’ll know it’s not just oil prices, but a whole chain of taxes, commissions, and global economics working behind the scenes.