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Pakistan petrol patrol

Posted on July 5, 2006
Filed Under >Adil Najam, Economy & Development, Pakistanis Abroad
13 Comments
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Adil Najam

As oil prices have skyrocketed, people around the world–industrialized and developing countries alike–have begun to be very careful about what price they pay for petrol (‘gasoline’ in the US) at the pump.High prices effect everyone everywhere, but not equally. Petroleum pricing can have particularly regressive impacts because poorer people tend to spend much more of their disposable income on energy but also because buying power tends to be much less in developing countries. A litre (or gallon) of petrol, therefore, is worth a much greater proportion of the average person’s income in Pakistan than in, say, the United States.

According to The News (1 July, 2006), one litre of ‘motor spirit’ will cost Rs. 57.70 in July. That means:

1 Litre of Petrol in Pakistan (Rs. 57.70)
3.52 UAE Dirham / 0.95 US Dollars / 1.30 Australian Dollars
0.52 UK Pounds / 0.75 Euros / 3.59 Saudi Riyal

1 Gallol of Petrol in Pakistan (Rs. 218.42)
13.31 UAE Dirham / 3.62 US Dollars / 4.88 Australian Dollars
1.96 UK Pounds / 2.84 Euros / 13.59 Saudi Riyal

So, if you are a Pakistani living abroad, think of what petrol costs in your neighborhood and then consider what it ‘really’ costs someone in Pakistan–not as a direct conversion, but as a proportion of income. It will be a sobering exercise.

13 Comments on “Pakistan petrol patrol”

  1. July 5th, 2006 11:21 am

    Fuel in many countries is heavily subsidized by their governments. It is not as cheap in many parts of Europe. It is a wider policy question as to what the government shuld charge as taxes on fuel consumption. Ofcourse, it goes hand in hand with governments committments to environment, infrastructure (roads/highways etc) development and availability of public transportation. Pakistanis are mobility impaired, due to high cost of travel, and I believe that has been one of many factors limiting the growth of the economy.

  2. July 5th, 2006 11:21 am

    People in Pakistan have converted to CNG too, which drives fuel cost down.

  3. July 5th, 2006 11:24 am

    Yes, the conversion to CNG in Pakistan–which started as long ago as the 1980s and speeded up in teh late 1990s–has been entirely because of cost concerns and not because of environmental ones. On subsidies, though, it is the US where teh indirect subsidies are high; other places, less so; some actually impose net tax on fuel, as Pakistan used to.

  4. July 5th, 2006 11:30 am

    Bilal, my sense is that the cost of fuel is HIGH in Europe. Did I misunderstand your comment? In Geneva, yesterday, I think it was around 1.7 Swiss Francs (around 1.5 US$) per LITRE. The question of taxing consumption should NOT ever be considered for a developing country like Pakistan. That is something that the Northern countries should do because that is where the consumption is excessive. In fact, Pakistani drivers tend to be great at conservation simply because the cost is so high. They take the type of precautions and actions to reduce consumption that someone in the US would not even think about. The challenge for Pakistan is that Pakistan cannot, and should not, reduce on net consumption but cut on wastage within that overall consumption, increase in needed areas of consumption (development related) and then try to see if the technology jump can allow us the room and space to bend the energy-growth curve (as China seems to have done) through technological leapfrogging.

  5. Suleman says:
    July 5th, 2006 3:39 pm

    I think providing better public transportation should be the first step. This would need better infrastructure , especially within our major cities, and possibly an underground train system. India was able to start it’s underground train system in New Dehli, I think we should follow suit not only to reduce pollution but ease up on fuel costs. Not everyone will need their cd 70 motorcycles/ vespa scootors/ suzuki fx cars on the road to get to work or get around town.

  6. Jay says:
    July 6th, 2006 6:33 am

    Petrol cost a lot in Paksitan.
    But in the major cities we do have easy access to public transportation such as bus’s.
    But we do need a massive investment in more public transport.
    Karachi has already given a contract to a Japanese company for a electric rail-car. That will be of big help cutting down need for a car, and for reducing pollution and for reducing traffic which is getting worse every day.

  7. Jay says:
    July 6th, 2006 7:11 am

    In New Delhi (India) the subway station has not decreased the traffic jams and has not reduced traffic and has also not reduced polution…but it was still a step in the right direction.
    What really needs to happen is everyone needs to just stop moving to the major cities and countries (Asian ones in perticular) need to start developing the rural areas.
    Why is everyone moving to Karachi, Lahore, and New Delhi???
    Why cant 3rd/4th Tier cities and villages get developing … as a result their people will stay in their small cities and those cities will start to grow….which is much better than everyone moving to the major cities.

  8. July 6th, 2006 1:51 pm

    I think this notion of teh secondary cities is the exact right one…. for all of Asia’s burgeoning ccities… not only is this importnat in terms of releasing pressures from the megacities, devising good secondary cities also have immense environmental and quality of life benefits…. recent scholarship also seems to suggest that ecconomic productivity itself might grow because of quality of life as well as becasue the ‘costs’ of operating in mega-mega cities like these far outweighs whatever economies of scale might otherwise be achieved… it is important to mention that in our South Asian context, teh secondard sity will still be many millions of people and be considered ‘mega’ or at least ‘large’ in most other parts of teh globe

  9. Raza Haider says:
    August 3rd, 2006 10:02 am

    Pakistan has no choice but to increase consumption of energy in an efficient manner if exonomic development is to occur.

    With the price of petrol and diesel being what it is in Pakistan, the country is ideally suited for advancing biodiesel technology. The basic raw material of biodiesel, cotton seed oil, is widely available in Pakistan and the stuff can be produced for under Rs. 30 / litre. This would allow an alternative energy choice for the consumer and boost industrial production as factories could use this for diesel generators and turbines.

    However, the government should provide some incentives for investment in this sector, just like governments everywhere else are.

  10. Debby_JJ says:
    August 8th, 2006 9:28 am

    price comparison is very interesting
    shoudl have, but did not realize how gas is so much more expensive in developing countries
    people who can afford the least pay the most
    and things will only get worse in future i fear

  11. December 31st, 2006 2:39 am

    [...] One of the great untold stories of 2006 may have been how economic existence for poor and middle class Pakistanis continued to become harder (here, here and here) even as a number of macroeconomic indicators seemed to do well. Some would say that eventually the benefits of macroeconomic growth will trickle down. But eventually can come too late for some. [...]

  12. Waqas says:
    January 10th, 2007 9:44 am

    hey raza… i saw you mentioned biodiesel being produced as cheap as 30 rs/ltr. could you elaborate on how you got to that figure. recently i have been studying biodiesel and been considering its use in Pakistan where diesel right now stands almost 38 rs/ltr at the petrol pump. Not only will this save our foreign exhchange but also give the jobs to the 65% of Pakistani population in the rural areas.

  13. Ayub says:
    November 3rd, 2010 4:31 pm

    petrol now Rs. 72/litre, its all about IMF policies implementation and an extra tax on General public

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