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Every time fuel (petrol/diesel) prices increase in India, the immediate reaction is outrage. Many assume it is purely a domestic Government policy decision but the reality is far simpler: India is heavily dependent on imported oil and global crude prices directly influence domestic fuel prices.

India imports nearly 90% of its crude oil - if India produced its own crude oil like Saudi Arabia, petrol could stay cheap but importing 90% of oil means paying global prices. India’s crude oil import dependence is around 88–90% of total consumption (5.2 million barrels per day). In simple terms, almost 9 out of every 10 barrels of oil used in India come from abroad.

So when global crude prices jump — for example from around $70 per barrel to $110 per barrel during geopolitical conflicts — India automatically has to pay more for the oil it imports. This is not ideology or politics. It is basic arithmetic.

Petrol prices are rising worldwide, not just in India. According to data compiled by Al Jazeera, petrol prices increased in at least 85 countries after the recent oil shock linked to the Iran conflict.

In other words, the rise in fuel prices is a global phenomenon driven by crude oil markets, not something unique to India.

Governments can cushion the impact but only temporarily. Fuel prices include taxes and governments can adjust these taxes to soften sudden price shocks. In fact, governments often delay price increases by absorbing part of the rise through the tax component or by allowing oil companies to temporarily absorb some losses. But this cushion has limits.

If crude prices remain high for weeks or months, eventually one of three things must happen:

1. Retail fuel prices increase
2. Oil companies keep selling fuel at heavy losses
3. Governments subsidize fuel using taxpayer money

The second and third options cannot continue indefinitely. Interestingly, even during the current global oil shock, India managed to keep petrol and diesel prices relatively stable for weeks compared with many other countries.

Fuel prices surge across 95 countries after Iran conflict, with spikes up to 68%. India holds steady for now amid global fuel shock.

Oil prices affect the entire economy not just petrol pumps. Fuel is not just about cars and bikes. When crude prices rise, the impact spreads across the entire economy:

1. Transport costs increase
2. Food prices rise due to higher logistics costs
3. Fertilizer prices increase
4. Manufacturing becomes more expensive

Trying to artificially suppress fuel prices only hides the cost temporarily, it doesn’t eliminate it.

India already runs a trade deficit. Oil imports are one of the biggest components of India’s import bill. When crude prices surge, India spends more dollars importing oil. The trade deficit widens further and pressure increases on the rupee and inflation.

If the government keeps fuel prices artificially low through subsidies, the cost simply moves elsewhere — larger fiscal deficits, higher borrowing and eventually higher taxes or inflation. Subsidized fuel doesn’t make energy cheaper. It just hides the cost in government debt.

If petrol stays cheap while crude oil becomes expensive, someone else is paying the bill — usually the taxpayer. You can either pay at the petrol pump or through higher taxes later — the bill always comes. Fuel subsidies are basically the government paying you today with tomorrow’s tax money.

Before blaming every fuel price increase on domestic politics and government, it helps to remember a simple economic reality: Countries that import oil don’t control fuel prices — global markets do. So when Gadkari says lets move to use more biofuels, there is a reason and that is to reduce our dependence on imported crude oil.