The new weekly review of POL prices has led to a massive hike announced Friday. The new prices have come despite the Oil and Gas Regulatory Authority, which determines the prices, recommending the absorption of the Carbon Development Levy, which is merely a new name for the Petroleum Levy, and is an important source of revenue for the federal government. Another attraction of this tax is that it is levied as part of the wholesale price, and consumers may ultimately pay it, but as part of the price, where it becomes a pass-through item. As it is, now the benchmark HOBC is costing Rs 133.19 a litre, while kerosene has gone up to Rs 102.21 and light speed diesel to Rs 98.84, and petrol Rs 104.55. CNG prices were also increased to Rs 95.72 and Rs 87.44 per kg in Regions 1 and 2 respectively. The hike comes to Rs 13.03 per litre for the last fortnight, and Rs 10.11 per kg for CNG (Region 2). That is a massive increase, and will be noticed even by consumers by now used to frequent increases in POL prices.

However, the increases that have just occurred have made eating and moving that much harder for most people. Both gas and kerosene-fuelled cooking goes up, while the price of all transport, including for food items, goes up, inevitably dragging up  food prices. In an economy where jobs are being destroyed by factory closures due to loadshedding, any increase, let alone the increase the fuel price rises entail, will oppress the consumer even more, and may drive him to a point where the coming elections may not be enough. As it is, no government, which faces a general election in less than a year, would like to displease the voter by plunging him in such a maelstrom of inflation as the fuel price hike promises. What makes matters worse is that pump owners engaged in hoarding on Friday, closing down until noon on Saturday. This is certainly reprehensible, and shows as false the belief that the frequency of the price revisions would act as a brake on this.

The government must realise that the POL price rises and the inflation they set off are taking place at a very high political cost it cannot afford to pay forever. An appropriate first step towards reversing this trend would be to increase the period of POL price reviews. Not only would it prevent hoarding, but it would also lend some much-needed price stability. Reversing this increase will only be of benefit in this election year.