On Monday, the government announced a significant increase in fuel prices, raising petrol by Rs12.90 per litre and high-speed diesel (HSD) by Rs3.72 per litre.
As a result of this adjustment, petrol will now be sold at Rs358.77 per litre, while HSD will have a new price of Rs381.77 per litre. Notably, the government continues to impose taxes and duties amounting to Rs114 per litre for petrol and Rs100 per litre for diesel.
The revised rates will take effect on September 8, 2023, as per the notification from the Petroleum Division.
Price Trends and Historical Context
High-speed diesel prices have significantly decreased from their peak of Rs520.35, which was reached on April 3. This surge in price started after the US-Iran conflict escalated on February 28, with HSD initially priced at Rs281 per litre.
Similarly, petrol prices soared to their highest point at Rs458.41 on April 3, following an increase from Rs266 in early March. The volatility in prices has raised concerns, leading to recent government interventions.
Daily Price Adjustments
In a move towards greater responsiveness to global market fluctuations, Petroleum Minister Ali Pervaiz Malik revealed on July 17 that fuel prices would now be adjusted daily. This change comes in light of renewed tensions between the US and Iran, which have affected oil prices globally.
Prior to this decision, the government updated fuel prices weekly since early March, implementing measures to conserve fuel amid potential supply disruptions stemming from the ongoing conflict in the Middle East.
Impact on Consumers and Economy
The cabinet, along with the Prime Minister, has tasked the Oil and Gas Regulatory Authority (Ogra) with the responsibility of setting fuel prices daily, informed by trends in the international market.
Petrol is primarily utilized for private transportation, including small vehicles, rickshaws, and motorcycles. Consequently, fluctuations in petrol prices particularly affect the middle and lower-income groups.
Likewise, changes in diesel prices have a broader impact on the economy as diesel is predominantly used in the heavy transport sector, power generation, and large machinery. The sale of petrol and HSD represents a significant revenue stream for the government, with monthly consumption rates of approximately 700,000 to 800,000 tonnes, contrasting with a mere 10,000 tonnes for kerosene.
