Petroleum Minister Ali Pervaiz Malik’s assertion that petrol remains cheaper in Pakistan than in many other countries may be correct on a simple currency-conversion basis. However, it is also an incomplete measure of what fuel costs an economy and its citizens. After the latest increase, petrol stands at Rs 310.71 per litre and high-speed diesel at Rs 323.30 per litre.
The relevant test is not where these prices sit in an international table, but how they compare with domestic incomes, and the capacity to absorb another shock.
A litre priced higher in a wealthy economy may consume a much smaller share of a worker’s earnings. Many such countries also provide reliable public transport and impose high fuel taxes as an explicit environmental policy. Pakistan offers neither comparable incomes nor comparable mobility alternatives.
The government’s own pricing structure deserves equal scrutiny. International product prices and the exchange rate matter, but so do freight, margins and levies. The federal budget expects roughly Rs 1.676 trillion from the petroleum levy this year, with a further Rs 50 billion projected from the climate support levy. They are, by no means, illegitimate, particularly when fiscal space is narrow, and blanket fuel subsidies have repeatedly proved costly and regressive. It does require the state to explain, at every revision, how much consumers are paying for imported fuel and how much for the government’s revenue needs.
The fixation on petrol also understates the inflationary role of diesel. HSD moves crops, food, construction material and manufactured goods. Its cost reaches households that do not own a vehicle. With annual inflation at 11.1 per cent in June, another increase in freight costs warrants close attention, even though the eventual pass-through will depend on demand, competition and the duration of higher prices.
During July-March FY2026, transport accounted for more than four-fifths of domestic petroleum consumption, while petroleum imports rose to 13.88 million tonnes. An economy so dependent on road transport and imported oil will remain exposed to conflict, shipping disruption and exchange-rate pressure regardless of its place in a global price ranking.
Pakistan does not need permanently cheap fuel financed by unsustainable subsidies. It needs a transparent pricing sheet, targeted support for those least able to absorb shocks, better public transport, more rail freight and a credible plan to reduce oil intensity. *