The world is going through an unprecedented time since the outbreak of coronavirus (Covid-19) disease. The Covid-19 pandemic has particularly hit the international oil market hard and the world oil prices have fallen sharply in response to plummeting demand in the wake of the outbreak. However, the Pakistan government could not make good use of international oil prices and has miserably failed to strengthen and build up its oil reserves by importing oil available at rock-bottom prices. The government has reduced the oil prices to some extent, but the reduction was offset by imposing an added petroleum levy on POL products.

Since the government has now started easing lockdown measures to provide immediate relief for small businesses, it also needs to take some strategic decisions to support the crisis-hit local oil and gas industry through sustainable oil pricing policies. The best option could be to deregulate oil prices given the fact that the state-controlled oil prices have both short and long-term devastating consequences for an oil-dependent economy like ours. Deregulation will help address the supply chain issues and will smoothen oil companies’ costs and profit margins. This could also help oil refineries to invest in further expansions and upgrades and OMCs would also be able to expand their storage capacity as well as retail networks to meet the growing energy needs of the country.

FARHAN DANISH,

Karachi.