HomeBusinessThe Broader Economic Impact of Expected Rise in Petrol Prices

The Broader Economic Impact of Expected Rise in Petrol Prices

As we navigate through the intricacies of international oil prices, currency devaluation, and government policies, Pakistani citizens have become all too accustomed to frequent gasoline price fluctuations. Unfortunately, this trend shows no signs of abating in the near future.

Recent reports indicate that a combination of factors, including currency devaluation and rising international oil prices, will cause the price of petroleum products to rise in the future days. According to these reports, petrol and high-speed diesel (HSD) prices may increase by 10 to 14 rupees and 14 to 16 rupees per liter, respectively, beginning September 15. The cost of kerosene is also anticipated to increase by 10 rupees.

The depreciation of the Pakistani rupee relative to the U.S. dollar is a significant contributor to this anticipated price increase. During the first ten days of this month, the rupee fell against the dollar by Rs. 4.5, from Rs. 299 to Rs. 304, before recovering barely. This depreciation has increased the price of imported products, such as petroleum products.

The international energy market is also a crucial variable in this equation. Compared to the first week of September, when benchmark international Brent oil prices were $88 per barrel, benchmark international Brent oil prices have risen above $92 per barrel. This increase in global oil prices has a direct effect on the cost of imported oil for Pakistan, thereby nullifying any potential exchange rate gains.

The government’s decision to pass on the 88 paisas per liter increase in selling margins for petroleum dealers and marketing corporations, as authorized by the Economic Coordination Committee (ECC) of the cabinet last week, will contribute to the anticipated price increases. These policies are intended to generate additional revenue for those engaged in the distribution of petroleum products, but they ultimately place a greater financial burden on consumers.

It is essential to observe that the import parity price for gasoline, diesel, and kerosene has increased since September’s commencement. Per liter, prices have increased by Rs. 13, Rs. 14, and Rs. 10 in a matter of days. Consequently, it is anticipated that prices for these petroleum products will follow suit.

According to Pakistan State Oil (PSO) product imports, petrol, diesel, and kerosene prices are expected to increase by Rs. 13, Rs. 16, and over Rs. 10 per liter, respectively. Even aviation fuel prices are anticipated to increase by 10 rupees per liter.

In light of these factors, it is probable that petrol and diesel prices will transcend Rs. 320 and Rs. 325 per liter, respectively, and that kerosene prices will surpass Rs. 240 per liter. These projections are worrisome for Pakistani citizens who are already confronting the financial challenges of inflation and economic insecurity.

The impact of rising gasoline prices extends beyond the spigot. Numerous Pakistani industries are anticipated to experience higher inflation as a result of these imminent petroleum price increases. Increased transportation costs, which impact the prices of products and services, can strain household budgets and contribute to a general economic decline. As citizens, it is imperative that we remain informed of these developments and their potential impact on our daily existence.

Understanding these factors enables us to make informed decisions and advocate for responsible economic policies, despite our lack of direct control over international oil prices and exchange rates. Finding a balance between economic stability and affordability for the populace remains Pakistan’s most imperative future concern.

The views expressed in this article are the author’s own and do not necessarily reflect Coverpage’s editorial stance

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