Surge in petroleum prices

July 4, 2018

On the recommendation of Oil and Gas Regulatory Authority (OGRA), the finance division approved new prices of petroleum products with effect from Sunday, July 1, 2018. According to a statement issued by the finance ministry, OGRA had proposed an increase in the price of petrol by Rs7.54 per litre, diesel by Rs14 per litre, kerosene oil by Rs3.36 per litre and light diesel oil by Rs5.92 per litre. Citing the “tight fiscal position”, the government announced to pass on “the full impact of the increase to the consumers”. “The increase in the petroleum prices is caused due to increase in petroleum prices in international market and depreciation of rupee against US dollar,” read the statement. The new price of motor spirit 92 RON petrol is Rs99.5 per litre, while that of high-speed diesel is Rs 119.31. Similarly, the per litre price of kerosene oil and light diesel oil is Rs87.7 and Rs80.9, respectively.

Some political parties are criticizing the caretaker government for increasing petroleum price, but considering the fact of recent depreciation of the rupee against US dollar and increase of price of oil in international market, government was not left with many options but to increase the price of petroleum products. It was hard to keep the prices constant after the current depreciation of the exchange rate, statistics show providing a subsidy on these petroleum products was not a feasible option for the authorities. Some experts rightly holding the previous government responsible for the recent hike, because they maintained artificial exchange rate for quite some time and now in result we have witnessed sharp depreciation. This price hike is the direct result of mismanaging the exchange rate for a long period.

Due to decrease of value of Pakistani currency, country is bound to witness more inflation and prices of fuel and electricity are also likely to increase. At the moment it is hard to accurately describe that how far the inflation will increase but educated guess describes it will increase. General elections are around the corner and it is hoped that next government will not repeat the mistakes that previous ones committed. It is hoped that upcoming government will bring a comprehensive plan to lift economic situation of the country. At the moment it is not right to blame the caretaker government for the unprecedented increase in prices of petroleum products.

Depreciation of rupee against US dollar is major reason behind increase in petroleum prices. 

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