During the last couple of years, global crude oil prices had seen a significant decrease after oil prices hit an all-time high before the world went into the financial recession of 2008. As gasoline is extracted from crude oil, lower rates of crude oil led to an overall reduction in fuel costs across the globe including Pakistan. A decrease in petrol prices meant driving a car became much more affordable than it previously was, and most importantly it reduced the burden on the pockets of “petrol-heads”.
I am no commodity market analyst, so I will leave the detailed analysis to the people who are specialized in it and to stay on topic which is cars of course, you can use the interactive graph to get an overview of the trend of crude oil price in recent times. Coming back to our market, a global decline in petroleum prices also helped lower down the otherwise high petrol prices in Pakistan. During the decade of 2000-10, Pakistan saw a phenomenal adoption of CNG thanks to decent natural gas reserves in Baluchistan. However, due to CNG’s lack of availability in the central and northern parts of the country coupled with reduced petrol prices, gasoline regained its top spot as the most preferred fuel type of Pakistan.
Thanks to consistently inconsistent governments, policies and taxation, the ruling elite of Pakistan continuously remains under the scrutiny of both the media and public. While constructive criticism is fruitful and an essential part of responsible journalism, there is also a dire need of showing the brighter side of the story. To start off, gasoline prices have remained consistent for over a quarter in 2016 with multiple proposals sent out by OGRA for petroleum price increase getting rejected by the federal government.
Just yesterday, me and one of my friends were having arguments over the unfair taxation on fuel prices. My friend was stuck on the fact that the only reason for low and consistent petrol pricing is because of the reduction in crude oil rates in the global markets and that the current gasoline prices can be further reduced by the government if they stop charging unfair amount of tax from fuels while I maintained my stance by using India’s example which despite the reduction of crude oil prices still sales Petrol at a whopping price of PKR 97.54. To further prove my point I browsed petrol prices of other countries in the region and was stunned to see that Pakistan despite importing a relatively large chunk of its crude oil needs has the 26th lowest petrol price in the world and is just behind Afghanistan and Myanmar in South Asia. To summarize here is a PakWheels info-graphic which showcases the petrol prices in the region in an easily digestible format. Please note that the prices are as of 15th August 2016.
However the glory days might be coming to an end!
Now though things at oil markets are seemingly making a shift towards a positive trajectory. The main reason for the recent increase in oil prices is the vague belief that Russia, OPEC (Organization of the Petroleum Exporting Countries), and other oil generating nations would agree to “freeze” production. The substance in the claims is yet to be proven despite that, the price of crude oil saw a significant increase of over 10% in last three days of trade a notable turn from the otherwise declining trend of crude oil prices during the last couple of years.
Only time will spell the effects of the recent crude oil price hike in the international market over the petroleum prices in Pakistan which as proven in this article are currently 26th cheapest in the world and 3rd lowest in the region. Since gasoline prices take around 5-7 weeks time to reflect on crude oil rate fluctuations, it looks more than certain that the “Constant Petrol Price Streak of Pakistan” is all set to be broken. All we can hope is that government keeps taxes at the current level which could help maintain our rank in the list of countries where gasoline is the most reasonably priced and much more importantly will help keep the fuel bills of Pakistan’s car enthusiasts’ in check!