The federal government on Friday once again raised petroleum prices, increasing the rate of petrol by Rs. 5.44/liter and high-speed diesel by Rs. 31.05/liter, bringing their new consumer prices to Rs. 316.15/liter and Rs. 354.35/liter, respectively.
In a notification, the Petroleum Division said the new prices would go into effect from July 18 and remain applicable until July 20.
The latest announcement follows the government announcing it is shifting to a daily price review mechanism for petroleum products compared to the weekly review implemented after the onset of the Iran war. Prior to the conflict, the government reviewed prices fortnightly.
Following renewed hostilities between Iran and the U.S., concerns are mounting globally over fuel supply disruptions, with Pakistanis seeing price hikes with every review. Last week, the government increased the prices of petrol and high-speed diesel by Rs. 13.18/liter and Rs. 13.80/liter, bringing them to Rs. 310.71/liter and Rs. 323.30/liter, respectively.
Primarily used by commuters in small vehicles, petrol is not considered inflationary but can significantly impact the budgets of middle and lower-middle-class households. Diesel, meanwhile, is mostly utilized in the transport sector and even minor fluctuations can trigger higher rates for essential commodities, as well as public transport.
Daily price review
In a video statement on Friday, Petroleum Minister Ali Pervaiz Malik announced that the federal government had decided to review fuel prices on a daily basis amid ongoing hikes in global oil rates.
Approved by Prime Minister Shehbaz Sharif as well as the federal cabinet, the decision mandates the Oil and Gas Regulatory Authority (OGRA) to determine consumer prices daily, with updated rates published on its website.
According to Malik, renewed hostilities between Iran and the U.S. have heightened uncertainty in global energy markets, with diesel prices rising sharply from around $110 per barrel to $140 per barrel. He claimed the government had continued its targeted fuel subsidy program, but acknowledged consumers were still feeling the impact of higher fuel costs.
He defended petroleum and carbon support levies on petrol and diesel as being “lower” than earlier imposed by the government, adding efforts are underway to deregulate the sector. He also claimed the decision would “strengthen” the state, though it remains unclear how oil prices can dent it.
Accompanying him, Information Minister Attaullah Tarar claimed the latest increase in domestic fuel prices was linked to regional developments and volatility in international oil markets, adding the country met almost its entire energy requirements through imported cargoes from various countries.
Defending the government’s policies, he said they had prevented the country from experiencing any energy shortages. He also maintained oil marketing companies were operating under strict regulatory oversight and warned that no one would be allowed to hoard supplies for profit.
Over the past week, several cities have seen fuel pumps refusing sales ahead of the weekly price review, as they expect to earn hefty profits with upwards revisions. The government has yet to take any action against these.
Tarar defended the government’s latest move as a “common feature” of global energy markets, noting similar policies were in place in many other countries.