Tag: petrol price analysis

  • Filling tanks and pockets: Pump owners anticipate PKR 3.95 petrol price hike

    Filling tanks and pockets: Pump owners anticipate PKR 3.95 petrol price hike

    With fuel prices anticipated to rise, travel buses and apps like Uber may see a hike in their fare, too. As PSO (Pakistan state oil) drafts up price revisions, fuel suppliers prepare to celebrate. This is because the expected price increases will boost profit margins to PKR 9.22 for oil companies and PKR 10.04 for petrol dealers, respectively.

    Reportedly, petrol prices are expected to be revised by PKR 3.95 per litre, kerosene oil by PKR 7.85 per litre, and LDO (light diesel oil) by PKR 8.33 per litre and the most significant of all, HSD (High-speed diesel) by PKR 10.

    It is to be noted that fuel is a good that is inelastic in demand. Simply put, any hikes in fuel prices are not likely to cause a reduction in consumption as it is considered a necessity. Moreover, it is unlikely that vehicles are utilising multiple fuel sources (barring the age-old combination of Petrol-CNG), which makes it impossible to switch to a cheaper alternative.

    It is this very principle that will allow business owners involved in the trade of fuel to benefit from the expected rise in prices.

    However, these profits will come at the cost of the rest of the economy. People will still have to consume petrol and other such products regularly. The higher prices will result in a decline in the purchasing power of customers. This would spell bad news for non-fuel businesses, as a higher proportion of the consumer budget would be allocated towards the purchase of fuel, which would mean fewer revenues for non-fuel businesses.

    This is likely to cause businesses to suffer as their customers will have less money to spend on their products.

    Moreover, businesses are expected to suffer as transport costs of goods from warehouses to stores will rise. Businesses will either have to absorb these extra costs, resulting in a drop in profits, or this additional cost will have to be passed onto consumers in the form of higher prices, resulting in a rise in inflation.

    Nevertheless, it’s not a win either for businesses or customers. However, it’s great news for businesses trading fuel.

  • Petrol, diesel prices may increase by Rs10-17 per litre

    Petrol, diesel prices may increase by Rs10-17 per litre

    Despite the fact that the prices for petroleum products and crude oil have remained largely stable, the price of petrol and diesel may increase by Rs10 to Rs17 per litre as of August 1, 2022. The depreciation of the Pakistani rupee is anticipated to be the cause of the upcoming increase.

    According to The News, sources claim that without taking into account the petroleum levy (PL), a price increase of Rs10 for petrol and Rs16–17 for diesel has been estimated. Additionally, Mogas prices have been forecasted at Rs15 per litre and diesel at Rs23 per litre if the government increases the petroleum levy of Rs5 per litre on gasoline.

    The anticipated increase in POL prices has also been calculated without taking into account the ECC’s Thursday approval of an increase in dealers’ margins (DMs) on POL prices of Rs2.10 per litre for gasoline and Rs2.87 per litre for diesel to Rs7 per litre. Petrol’s price could increase by Rs2.10 to Rs17.10 per litre, and diesel’s price could increase by Rs2.87 to Rs25.87 per litre.

    The increase in dealers’ margin will take effect on August 1, 2022, if the federal cabinet approves this decision in the next two days. Industrial sources reported that the US dollar has increased in value by Rs40 so far this month.

    The current exchange rate against the US dollar is Rs239.9427, and the open market price is Rs246.15. However, they did say that the exact price of gasoline and diesel will depend on the exchange rate in force as of today (Friday).

    Since the price of crude oil as of Thursday settled at $99.4 per barrel, according to independent experts, Pakistani consumers won’t be able to benefit from the decrease in price of POL as a result of the rising exchange rate. The government seems more inclined to impose PL on both gasoline and diesel by Rs5 per litre each.

    Liquefied petroleum gas (LPG) costs also rose by Rs10 per kilogramme on Wednesday without an Oil and Gas Regulatory Authority notification (OGRA).

    The chairman of the LPG Distribution Association (LDAP), Irfan Khokhar, told Profit that a household cylinder now costs Rs2,750 after an increase of Rs150, while the cost of a commercial cylinder has increased by Rs450 to Rs10,438 as a result of the unannounced price increase.