Why are the prices of petroleum products increasing?
The recent spike in prices of petroleum products in Pakistan has forced citizens to cope with increased spending, forcing people to take a closer look at the factors behind this unwelcome trend.
Karobar
Experts say that global market fluctuations and domestic energy dynamics are the main reasons for the current price increase.
In contrast, Pakistan exports 90% of its petroleum products, of which only 10% is produced domestically.
At the heart of the issue is the continued rise in global oil prices, which has a direct impact on the local market.
Pakistan's heavy dependence on imports for the majority of its petroleum products means that even small changes in the international oil market can have a profound impact on domestic fuel prices. In 2014, the country had reserves of 387.49 barrels but that number has dropped to just 92.91 barrels this year.
In addition, the number of active oil wells has decreased significantly, from 100 wells in 2014 to only 47 wells today.
The growing gap between oil demand and national production is worrying.
Another pressing problem facing Pakistan's energy sector is the reluctance of international oil companies to operate within the country's borders. The main reason for this hesitation is the government's non-payment, leading to a disincentive trend: since 2010, 11 domestic companies have closed. This further exacerbates the gap between oil supply and demand.
Despite these challenges, it is worth noting that compared to neighboring countries, petroleum product prices in Pakistan remain relatively low. However, addressing the rising cost of petroleum products requires a multi-pronged approach.
