Oil Pricing - Let's be fair on increase & decrease

Oil prices in India have been on a dynamic pricing mechanism (DPM) for the past 18 months - from 16th June 2017 (the domestic fuel prices are dependent upon 15 days average international fuel prices taking into factor exchange rates of Rupee).  I welcomed this move as this removes subsidies and brings in transparency in pricing.  The dynamic pricing mechanism was intended to ensure that the benefit of even the smallest change in international oil prices can be passed down the line to the consumers.  Consider the below table, does this reflect the principle of DPM?

Oil prices decreased by 27% in 2018 whereas there is no reduction in Petrol prices during the year.  Technically if DPM were to work perfectly and all other items of pricing (taxes, refining costs, freight costs) remain constant retail price of Petrol in Chennai should have been atleast 11% lower compared to 1.1.2018 and should be retailing around Rs.64.55 on 24.12.2018.  True we have a 15 days average mechanism take away another 5% for it, and retail prices should be Rs.68.18 and not Rs.72.48 per litre.

To be fair we should also talk about increases not passed on when the prices were at the peak on 4th October 2018

The Government at this point intervened and reduced taxes which dropped prices approximately by Rs.4 per litre of petrol. 

DPM should be fair, it does not reflect its true strength when Government Agencies, Oil companies intervene.  DPM should be left to market forces without any intervention.  For this taxes need to be aligned under GST, on Petrol currently Rs.36 is on account of taxes which contribute 49% of retail prices of petrol.  Taxes should not be increased / decreased to suit end pricing requirements.  Oil being a prime mover of the economy should be priced fairly reflecting market conditions.  With inflation hitting lows it is imperative a fair oil pricing will lead to further growth dynamism in the economy.

Moving forward good news is petrol / diesel prices will reduce atleast by around 10% in the next 15 days as I do not foresee any increase in global oil prices and currency also will hold steady in the short term.