A Rs1 cut in petrol prices may look like welcome news, but the bigger story is in the government’s new approach to fuel pricing. As high-speed diesel (HSD) goes up by Rs3.37 and prices are now subject to daily changes, consumers and businesses are entering a new era of uncertainty where global events could affect local fuel costs almost overnight.

The federal government on Monday changed petroleum prices under the new daily review mechanism. The Ministry of Petroleum announced the revised prices which became effective from 28 July.

The latest adjustment comes after the government decided to adopt a daily fuel pricing system from July 17. Rather than the previous two-weekly adjustments, prices are now calculated using a rolling seven-day average of international oil prices, which enables a more rapid reflection of shifts in global energy markets.

This is happening while the international crude oil prices are still too volatile.  Brent crude last week rose above the $100-per-barrel level for the first time since May on the back of attacks on tankers in the Red Sea that disrupted global supply routes and renewed tensions with Iran that sparked fears over energy security. These developments have put more pressure on oil importing countries of which Pakistan is one.

More importantly, the new pricing mechanism means that fuel costs could now change much more frequently, making it harder for households and businesses to plan their monthly expenditures as international oil markets continue to react to geopolitical tensions.

Credit: Independent News Pakistan (INP)