THE Government on Friday once again decreased the price of petrol by Rs.6.59 per litre and that of high-speed diesel (HSD) by Rs.4.25, in the fifth consecutive cut in fuel prices. Following the revision, petrol will retail at Rs.346 per litre, while HSD will cost Rs.378 till the next review on November 10.
There has been a significant reduction in the prices of both petrol and HSD (over Rs. 28 and Rs. 17 per litre respectively) in a week due to fall of prices of oil in the international market and the trend could persist if diplomatic efforts aimed at finding a peaceful solution of the Gulf war succeed. However, there are three factors that inhibit the possibility of trickle-down effect of the relief to the common man. Retailers and transport providers raise prices quickly when fuel costs surge, but lower them very slowly – or not at all – when fuel costs drop. And this more so in the case of industries that raise the cost with every upward movement in the prices of oil but never bring prices down even if there is a wholesome reduction in oil prices. The prices of petrol and HSD have fallen but the price of LPG has almost doubled putting additional burden on consumers as well as prices. This is confirmed by reports that short-term inflation rose to 12.31 per cent year-on-year in the week ending Nov 5, driven largely by LPG and perishable food products. Pump prices include heavy components like petroleum levy and general sales tax that keep the prices in Pakistan much higher as compared to other countries. Instead of a targeted fuel subsidy, the Government should have provided a general subsidy on oil to shield people against the transitory hike in prices of oil in the international market.
