Oil Prices Destroying Economy
By Farid Masood • Apr 29th, 2008 • Category: Politics • 12 Comments •Mr Ishaq Dar, newly appointed Finance Minister from PML(N) had told the media that some finance policies of ex-government need to be continued. This was astonishing for the nation as the policies of last government headed by Mr Shaukat Aziz were completely rejected by the nation.
In recent days, Mr Dar again told the media that petroleum prices must have to be raised before budget. Such dictation might be coming from IMF or the World Bank. As both departments are in America so they are much inclined towards the safe guarding American economy or US Dollar. If this is not the case in actual even then the petroleum prices are going to be raised by the government of Pakistan.
If I go some years back, Pakistan State Oil, Pakistan International Airline and State Life Corporation were those entities, which were earning huge profits for the government. Then in recent years PIA is out of this list and became a white elephant (I shall try to talk on this issue in near future also). State life and PSO is still earning for the government.
When the crude oil prices were between USD 50 ~ 60 then government was earning huge profits out of it even the oil contribution from Saudia Arabia was stopped for Pakistan. This contribution from Saudi Arabia has resumed recently but the crude oil price has risen up to USD 120 per barrel. This could be a reason for re-addressing the oil prices before up-coming budget 2008~09.
Brake of oil prices in Pakistan should be made public by the government of Pakistan to support its stand point that government is giving rebate on oil prices by such and such rupees per liter of diesel, petrol etc, because government is still earning from this head.
At the end of this article I demand from the government of Pakistan that it should detach its petroleum prices from USD and attach it to the real oil producing countries like Saudi Arabia, Iran etc as the USD is declining due to its policies which have been rejected by every human being in senses and declining dollar is affecting world economies at large.
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Mr Faisal, It seems that you don’t have grip on economics thats why you are commenting like this that detach from US Dollar and Attach with so and so. Pakistan is not a small home that one day Papa will say that we are going to stop eating this things and next day whole family will follow to adjust budget. Its an economy of 16 crore people in one country.
As far petroleum prices are concerned, we can’t get rid of them in short time. It need real planning means sincere effort from authorities. Even then it will take not less than one decade. I have few suggestions to give relief to common man for short term. I may be wrong but it will work a bit.
1- Pakistan is producing at least 15% of total demand of petroleum products. Government should set its own rate for this production, as they do for wheat…and then make a weighted average rate for setting petroleum prices. Why they consider Pakistani petroleum at international rate. No country, who is producing fuel follows international rates. OGDC is government owned company and have maximum share of Pakistan petroleum.
2- Government should decrease their duties and other stuff on fuel prices for end user. I don’t know cost of production these days but when it was of Rs 53 for pure petrol… Cost of production of PSO was only Rs 23.75 approx. Rest all were duties and surcharges and commissions….but end user was getting at Rs53 (65% petrol+35% kerosene oil). Why these governments not decreases their life style and extra ordinary expenses to decrease tax rates from consumer goods.
3- Government should make long term policy to decrease reliance on thermal power for generating electricity. They should go for nuclear energy and coal energy. Both are ample in quantity in Pakistan. and to make dams like Ghazi Brotha Dam…No water is wasting in this project and we are getting good quantity of electricity also.
4- Industries like cement, urea, textile should shift their requirements from petroleum to other fuels for combustion and treatments. Coal is good for it but our infrastructure not allows constant availability of coal from Balochistan.
There are lot of other things that can be applied for keeping fuel prices well in control. We can’t control international prices but can make our plans in the interests of common man. But who cares Common Man…
This is in relation to your point # 2: Brake-up of oil prices in Pakistan should be made public by the government of Pakistan to support its stand point that government is giving rebate on oil prices by such and such rupees per liter of diesel, petrol etc,
as far as your point # 3 is concerned: we are depended of international coal, local coal quality has some problems of ingredients. The decision of IPPs was a wrong one at that time we got them into contract and this is wrong still now. Industries are purchasing Indonesian coal. coal reserves from thar are still to be worked out. Big groups are purchasing coal for their need 2~3 years in advance so the prices are rising and will carry on rising as the days pass.
your first question: Our economy is attached to US dollar and this is a big problem, yes you are right this is not a Papa’s decision, but we don’t have any leader to do it even in the long term planning.
In case of canals like the one Ghazi Bhrotha is a good planning but the water table of land will go down with the passage of time as there is no seepage from cemented canal, due to this factor drinking water is going to be scarce in cities where the canals are built with cement concrete.
Shaukat Aziz, come back ! You did wonders to the Pakistan economy and it was easily absorbing the pressure of rising fuel prices by giving subsidy to the nation.
This Ishaq Dar will make nation die very soon. In just one month he increases the prices of petroleum products twice. I don’t know what he will do in next 5 years if he prolonged as Finance Minister.
Relax! Shaukat Aziz or no Shaukat Aziz. Ishaq Dar won’t last that long, he is qualified to take care of the accounts of his masters’ financial interests.
Aashique of Musharraf
Mr Shortcut Aziz will not return as he was given a chance to flee in time until his names comes under ECL.
“Oil Shock”
Even as the Economy Reels, a Golden Opportunity is at Hand
For more than a year the U.S. economy has been reeling from the housing and credit crises, but now it’s staggering from the blow of rising energy and food prices. The impact of $4-a-gallon gasoline is rippling outward as Americans cut spending of all sorts. Every month it seems as if another major economic sector hits the skids: first it was housing and construction, then automobiles and airlines, then tourism and, finally, back to housing with the implosion of Fannie Mae and Freddie Mac.
What ties all these crises together is cheap energy, which drove years of suburban sprawl, SUV sales and big-box consumption. That’s all in the past, however. The United States consumes 12.4 million barrels of imported oil products a day. At $140 a barrel, that comes to $633 billion a year — a huge transfer of wealth to oil companies and oil-producing countries and four times the annual cost of the Iraq War.
Oil prices have surged six-fold since the 2003 invasion of Iraq. But with the housing sector on fire and profits robust, consumers and businesses were able to absorb the costs. Not anymore. In June, consumer prices rose 1.1 percent nationally and 1.2 percent in the New York region. Also in June, the producer price index, the inflation rate for businesses, rose an astonishing 1.8 percent. The inflationary effects are being passed through the commodity chain in price increases and job losses.
To view the rest of this article, see http://www.indypendent.org/2008/07/19/oil-shock/
Crude Oil below USD 100 per barrel, let see when government is going to reduce the prices of oil in Pakistan
Nothing will reduce in Pakistan. If prices will reduce…they will equal balance by increasing Taxes.
Telecom sector is in front of you. previously it was 15% GST…now 21% and total tax reaches to 33%.
Petrol Price Rs 5 per liter will be reduced on September 15th
i want to know why government is not intended to decrease oil prices in pakistan.even though international prices of oil has decreased up to 69$ per barel.does people party see us as ignorent like we don’t know nothing what games they are playing with the people.they are mostly corropt politition in people party who only wants commision.And here by not decreasing oil prices they are getting huge amount of money as commision of OGDC.
yes ur right man.Corroption is the main reson in pakistan.i think people should protest against this unjustice of government by not decreasing oil prices in pakistan.like before we see if prices of international market increases government increases oil prices next day.Thay did not wait for next month like they are saying that they are waiting for the next month to fix oil prices.how long they do unjustice with the people of pakistan.May God bless pakistan.