Oil prices

That oil prices have been kept unchanged for February is a small mercy, with the government making much of the Rs 6.6 billion this will supposedly cost it. That cost is actually revenue that will not accrue from Petroleum Development Levy. The decision to keep the prices unchanged came because of the opposition of members of the oil pricing committee to raise them. Though the IMF agenda for Pakistan includes passing on any price increases in the world oil price to Pakistani consumers, the political parties realise that, at Rs 72.96 per litre, petrol had probably reached the limit of the consumer’s ability to pay, as had kerosene at Rs 70.95, It should be remembered that with the increase in gas loadshedding, consumers are increasingly turning to kerosene stoves for basic cooking.

The really difficult part is to prevent the political parties from going back on this commitment to the solution of the ordinary man’s problems. There must be a realisation that these price rises will set off a further round of inflation, not just directly, but because of the increases they will mean in every form of transport, and the prices of all goods which have to be transported. The country has been through several bouts of inflation, including that caused by the hike in world oil prices, and the average consumer cannot tolerate any more, especially with inflation predicted by the State Bank at 16 percent. To be thrown into the mix is the worry expressed by the head of the International Red Cross Federation that the food insecurity caused by the recent floods could lead to a Tunisia-like situation, and the fuel price rise at this time could merely inflame sentiment, already veering dangerously towards a public outburst. – Nation