₹82 or ₹102? Here Is the Actual Breakdown of What You Pay for Every Litre of Petrol — and Where the ₹20 Goes

The Claim

On July 9, 2026, AAP leader Arvind Kejriwal announced a press conference on fuel pricing with a specific, testable allegation: petrol should be available at ₹82 per litre but the government is charging ₹102 per litre.

The implied accusation: the government is pocketing ₹20 per litre — profiteering off every car, truck, autorickshaw, and two-wheeler in the country.

The claim is politically charged. The Squirrels tests it against the actual price structure — component by component — to determine where the ₹20 goes and who keeps it.

The Actual Price Breakdown: Where ₹102 Comes From

Here is how one litre of petrol is priced in Delhi, based on current OMC data and excise/VAT structures:

The price varies by city and state. Delhi's VAT (19.4%) produces a price around ₹94–96. Mumbai (Maharashtra VAT at 25% + ₹5.12 surcharge) pushes it past ₹105. Hyderabad (Telangana VAT at 35.2%) exceeds ₹107.

Kejriwal's ₹102 figure likely refers to a high-VAT state or the post-May 2026 hike price in some metropolitan markets. His ₹82 figure appears to be calculated by applying current crude prices without OMC loss recovery buffers.

Is ₹82 Realistic? The Math

With Brent crude at approximately $72–80/barrel (post-Hormuz reopening), the landed cost of crude in India is roughly:

• $75/barrel ÷ 159 litres = $0.47/litre = approximately ₹39/litre (at ₹83/USD)

• Add refining cost (~₹5–7/litre) = ₹44–46/litre

• Add freight, OMC margin, dealer commission (~₹7–8/litre) = ₹51–54/litre

This is the pre-tax cost: approximately ₹51–54 per litre.

Now add taxes:

• Central excise: ₹19.90 → Total: ₹71–74

• Delhi VAT (19.4% on pre-VAT price): ~₹14 → Total: ₹85–88

At current crude prices and exchange rates, a "fair" retail price in Delhi — including all current taxes — is approximately ₹85–88 per litre. Kejriwal's ₹82 is achievable only if excise duty is reduced by ₹3–6 or if OMC margins are compressed to zero.

Where the ₹20 Actually Goes

If a consumer in a high-VAT state pays ₹102 and the pre-tax cost is ₹51–54, then approximately ₹48–51 of every litre is tax and margin. The breakdown:

Central government takes: ₹19.90 (excise duty — fixed, same nationwide)

State government takes: ₹13–25 (VAT — varies by state, percentage-based, so it rises with price)

OMC margin: ₹0–6 (currently volatile — OMCs were losing ₹6/litre on petrol and ₹19/litre on diesel as recently as July 4, per Business Today citing ICICI Securities)

Dealer: ₹3.77 (fixed commission)

The largest component of the ₹20 gap between Kejriwal's ₹82 and the ₹102 retail price is government taxation — central excise plus state VAT — which together account for approximately ₹33–45 per litre depending on the state.

What Neither Side Mentions: The OMC Loss Recovery

Here is the complication that Kejriwal's framing omits and the government's framing exploits.

During the Hormuz crisis (March–June 2026), oil marketing companies sold fuel at prices below their cost because the government did not allow pump prices to reflect the full impact of $105+ Brent crude. Petroleum Minister Hardeep Singh Puri disclosed that OMCs incurred losses of approximately ₹75,000 crore in a single quarter (April–June 2026) by selling petrol, diesel, LPG, and aviation fuel below market rates.

OMCs are now recovering these losses by maintaining retail prices even as crude has fallen to $72–80. This is not profiteering in the conventional sense — it is delayed loss recovery. But from the consumer's perspective, the effect is identical: you pay more than the current crude price warrants.

The "rockets and feathers" pattern — prices rise quickly when costs go up, fall slowly when costs come down — is not unique to India. The Squirrels documented the same pattern in US gas prices this week: Brent has fallen sharply since the Iran deal, but American pump prices remain at $3.79/gallon.

The Structural Question: Why Isn't Fuel Under GST?

Every analysis of Indian fuel pricing arrives at the same structural question that no government — BJP or Congress, Centre or state — has been willing to address.

Petrol and diesel are excluded from GST. They are taxed under a dual system of central excise duty and state VAT. The highest GST slab is 28%. Petrol is effectively taxed at over 100% of its base cost in some states.

If petrol were brought under GST at 28%, the tax per litre would be approximately ₹14–15 (28% of ₹51–54 base cost) — compared to the current ₹33–45 in combined excise and VAT. The retail price would fall to approximately ₹68–73 per litre.

Why hasn't this happened? Because fuel taxes are the single largest revenue source for both the Centre and the states. The Centre collected approximately ₹3.5 lakh crore from fuel taxes in FY 2025–26. States collected an additional ₹2–2.5 lakh crore in VAT. Neither the Centre nor the states — regardless of which party governs them — are willing to sacrifice this revenue.

Kejriwal governed Delhi until 2025. Delhi's VAT on petrol is 19.4%. He did not bring fuel under GST during his tenure. The BJP governs the Centre. It has not brought fuel under GST either. The Congress governed before 2014. It did not bring fuel under GST.

The structural answer to "why is petrol ₹102 instead of ₹82" is: because every government — regardless of party — treats fuel taxation as non-negotiable revenue.

The E20 Dimension

Kejriwal's second demand — consumer choice between E20, E10, and E0 fuel — connects directly to our earlier analysis of the ethanol excise waiver.

His argument: the government is forcing E20 (20% ethanol blend) on consumers despite public opposition over mileage reduction and vehicle compatibility concerns. He alleges the government pressured six automobile manufacturers (Maruti, Toyota, Hero, Hyundai, Bajaj, TVS) to hold press conferences reassuring the public about E20.

The Squirrels' earlier analysis documented the mileage trade-off: ethanol has approximately 30% lower energy content than petrol. E20 reduces mileage by an estimated 4%. E30 reduces it further. The government's ethanol programme is a legitimate energy security strategy — but forcing a single blend without consumer choice is a policy decision, not an inevitability.

The Bottom Line

Kejriwal's ₹82 is in the right ballpark at current crude prices — achievable with a ₹3–6 excise cut and zero OMC loss recovery margin. His ₹102 is the reality in high-VAT states. The ₹20 gap is real.

But the gap is not "profiteering" in the simple sense the accusation implies. It is a combination of:

• Central excise (₹19.90 — fixed, set by BJP-led Centre)

• State VAT (₹13–25 — set by state governments of all parties, including AAP-governed Delhi until 2025)

• OMC loss recovery (₹0–6 — recovering ₹75,000 crore in Hormuz-era losses)

• Dealer commission (₹3.77 — fixed)

The structural fix — bringing fuel under GST — would reduce the price to ₹68–73. No government has done it. No opposition party that has governed a state has done it. Because the ₹6 lakh crore in combined central-state fuel tax revenue is the one thing every party agrees on: it is too valuable to reform.