Price hike of fuel in the world market
Golam Mostafa Jibon: Country’s economy is now facing dilemma over the price hike of fuel oil in the world market.
Experts said, if the prices of fuel oil in the country are adjusted with the global market, the prices of all commodities and services will be increased putting the poor and common people at vulnerability. Doubtlessly, it will increase the cost of living. At the same time, the rate of inflation will start a race. This will have a negative impact on the economy. Economic recovery activities will also be hampered after a huge loss caused by ongoing corona pandemic.
On the other hand, if the prices do not match or increase, the government may face a severe financial pressure.
The government will have to pay a large subsidy, it buy at a higher price and sell at a lower price. It will increase the government’s debt. Besides, there is a fear of fuel oil smuggling due to high prices in neighboring countries. The energy ministry has written to the border district administration, law enforcement agencies and border guards to prevent smuggling of fuel oil to neighboring countries from Bangladesh. Concerned people believe that, if the price of fuel oil increases, the cost of goods’ transportation will increase in the first stage. The cost of public transport will increase in the second phase. Along with this, the production cost of all products will increase. In this case, the cost of investing in production will also increase.
This is why, the economists have suggested keeping the market system stable through subsidies without raising fuel prices. They said, it will be difficult to deal with the negative impact of rising prices on the market. After Corona, the price of fuel oil in the global market has gone up due to sudden increase in demand. If the demand decreases again after a few days, then the price will also decrease. It is also feared that new Corona infections may increase in the upcoming winter. If that is true, demand will fall and oil prices will fall again. Then it will be difficult to bring back the negative impact of the increase in fuel prices in the market.
Former Governor of Bangladesh Bank Salehuddin Ahmed said that, “The demand for everything has suddenly increased as the Corona situation has started to be ease. Though, the demand for fuel oil has increased, the supply system is so far abnormal. The price is on the rise. Increasing its price in coordination with the international market will have a severe negative impact on the market. (See Page-2)
The price of everything will go up. Corona has reduced people’s purchasing capacity. That has not yet returned to its previous state. In this situation, if the price of goods increases due to the policy of the government, it will become unbearable for the consumers especially for the poor and low income group of people. In view of this, it would not be right to increase the price of oil now. Rather it should be observed for a while. Suddenly increased, may decrease again. Because of if the situation is normal; it may be normal within two or three months.”
According to experts, fuel oil is the lifeline of the economy. Fuel oil has a direct and indirect relationship with almost all types of activities. There is a link of fuel oil use with almost all products.. Oil is being used as a raw material especially for power generation. If the price goes up, the cost of electricity generation will go up. Then the question of increasing the price of electricity will come. If the price of electricity goes up, it will affect all sectors. Fuel oil is the main ingredient in freight and public transport. With the increase in its price, the price of goods in these sectors will increase. Consumers will be forced to buy products at higher prices. That is why, the rate of inflation will increase.
Energy expert and energy advisor of the Consumers Association of Bangladesh (CAB) Prof. Shamsul Alam said, “The income of the people of the country has decreased during the Corona pandemic. Consequently, the prices of daily commodities are going up in the market. Now if the price of oil goes up, the situation could be dire. At this moment, the government needs to be protected by the people. But instead of doing so, the officials of various government agencies are making the government unpleasant. Their activities are in the process of increasing the price of fuel oil.”
Meanwhile, the Bangladesh Petroleum Corporation (BPC) said that even though the price of oil was low during the corona pandemic, it was not possible to import due to lack of preservation capacity. Besides, the demand of fuel oil was low at that time. Many power plants, factories and vehicles were closed. There was not enough demand for oil sales as the airlines were closed. Even then BPC has made huge sums of money. However, even after making a profit, BPC had to deposit the money in the government treasury at the end of the year.
According to sources, the price of diesel is Tk 65 per liter in Bangladesh. In India, it is being sold at Tk 105 to Tk 126 per liter. Due to high oil prices in India, the fear of smuggling from Bangladesh is increasing. Oil smuggling could take place in Myanmar for the same reason.
Meanwhile, octane and petrol have not been imported for several years. Octane and petrol are being produced in the country to meet the entire demand by refining and processing the ‘condensate’ obtained as a by-product of natural gas from the country’s gas fields in public-private refineries. The government’s profit in this sector is much higher as octane and petrol are being produced using the country’s energy resources.
According to public and private sources, the government is making a profit of around Tk 1,000 crore by selling 3 lakh tons of octane-petrol a year in addition to tax and VAT. As the country’s largest petrol refinery has been closed for a month, the government may also have problems with petrol.
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