According to The Express Tribune’s October 9, 2026 report, the mechanism approved on August 19, 2026, uses calendar-year-to-date averages for specified import components when Pakistan State Oil (PSO) has no petrol cargo within the preceding seven working days. The Oil Companies Advisory Council (OCAC) says this can leave importing companies unable to recover procurement costs. It wants the most recent PSO cargo used instead.
The reported numbers merit scrutiny. Against an annual average premium of approximately $13 per barrel, upcoming PSO cargoes reportedly carry premiums exceeding $28. OCAC estimates under-recovery of Rs. 16–17 per litre. These are industry claims requiring independent verification, not an established entitlement to higher prices.
Nevertheless, an old average can plainly misrepresent the cost of replenishing supplies during a sharp market disruption. The proposed cure is also imperfect. The last cargo may itself become unrepresentative, particularly when prices fall. Neither a stale annual average nor one company’s latest purchase should become an unquestionable benchmark.
A defensible formula needs recent, independently verifiable procurement evidence, consistent treatment of exchange rates and a published fallback rule. It must recognise efficient supply costs while preventing expensive purchasing decisions from automatically becoming the consumer’s liability.
The daily pricing framework, based on a seven-day international average, has a legitimate purpose: reducing adjustment delays and political discretion. However, changing prices more frequently does not establish that every component is justified. Daily administration remains administration.
Real competition requires access to imports, storage and distribution, credible enforcement against collusion, and freedom for efficient suppliers to compete on price.
The price of petroleum, oil and lubricant (POL) products cannot sensibly be assessed by dividing the international crude price by litres per barrel. Petrol and diesel are refined products with distinct market quotations. Their delivered costs include relevant premiums, freight, insurance, incidentals and currency conversion. Domestic freight equalisation, marketing and dealer margins, customs duty and government levies then affect the final price. Mixing these categories conceals who receives each rupee.
The October 9 price report records petroleum levy of Rs. 80 and climate support levy of Rs. 5 per litre on both petrol and diesel. It separately identifies dealer margins of Rs. 9.98 and marketing margins of Rs. 7.87. Thus, Rs. 85 per litre represents the two levies alone, before customs duty. Against petrol’s subsequently notified Rs. 398.30 price for October 10–12, 2026, those levies amount to approximately 21.3 percent. They are not the total fiscal burden.
For an illustrative household purchasing 40 litres monthly, these two levies alone cost Rs. 3,400. That excludes the fuel-related charges embedded in food delivery, commuting and other purchases. A uniform charge per litre takes no account of income or necessity. The affluent may buy more fuel overall; the harder question is how much disposable income poorer families lose through direct purchases and the prices of essential goods. The scale is unmistakable.
The federal Budget in Brief 2026–27 places petroleum levy receipts at Rs. 1,676.509 billion, against revised receipts of Rs. 1,498 billion for 2025–26 (collection till 30 June 2026 was Rs. 1,567,450 billion). It separately budgets Rs. 50 billion from climate support levy. These are budget estimates, not realised collections. They nevertheless reveal how deeply public finances depend on extracting revenue from an input used throughout the economy.
This concern is longstanding. In “Unjust fixation of petroleum prices”, published in 2016, our critique addressed the denial of international price relief through domestic taxation and questioned freight and refinery benefits. The enduring test is straightforward: when external costs decline, do consumers receive the saving, or does another component rise? A formula loses credibility when its arithmetic becomes a convenient shelter for discretionary extraction.
We examined the same fiscal distortion in “Petroleum levy, circular debt and inflation”. Petroleum levy is booked as federal non-tax revenue outside the divisible pool, unlike shared taxes. This creates an incentive to prefer levies over ordinary taxation. Our constitutional objection to expanding a purported non-tax charge through Money Bills deserves parliamentary examination. An accounting label cannot settle questions of legislative procedure, provincial entitlement or public accountability.
Import-parity pricing for domestic refineries also requires examination. It values local output against comparable imports rather than simply reimbursing production expenses. Such a benchmark can encourage investment and supply, but it can also deliver exceptional gains during shortages.
Regulators should disclose which import-related allowances apply to local production, justify them, and test refinery protection against enforceable upgrading commitments. Import parity should not become permanent immunity from scrutiny. The consequences extend far beyond motorists. Diesel costs enter cultivation, irrigation, harvesting and freight. Petrol affects motorcycles, delivery work and household travel. Higher transport and production costs can reach food and services, while businesses unable to pass them on face squeezed margins.
In “War mania hits global economy”, coauthored with Abdul Rauf Shakoori, it was explained how external energy shocks erode household purchasing power and weaken enterprise. Domestic fiscal choices can amplify that damage.
Transparency must also reach the filling station. Every receipt should distinguish the product price, distribution charges and public levies. Freight equalisation has a defensible purpose where it moderates geographical differences, but its collections and settlements require independent reconciliation.
Similarly, a climate levy should be judged by measurable environmental outcomes and protection for vulnerable households. Calling a charge green does not make a motorcycle commuter able to afford an electric vehicle.
Without accessible public transport and affordable alternatives, raising the cost of essential mobility punishes dependence before creating any practical means of escaping it.
A single fuel increase raises the price level; repeated shocks and wider cost pass-through can prolong inflation. The extent depends on competition, wages, demand and policy.
A lower inflation rate later does not restore lost purchasing power. For salaried families, pensioners and informal workers, adjustment often means less nutritious food, postponed treatment, interrupted education and depleted savings.
Reform must join credible pricing with fiscal restraint. Publish every price component and its source; audit premiums, freight and exchange adjustments; and pass reductions through as consistently as increases.
Establish predictable levy limits through proper parliamentary scrutiny. Finance targeted household and public-transport support through explicit annual budgets, while reducing exemptions, taxing undertaxed incomes and property, and cutting wasteful expenditure.
Any levy reduction needs a credible fiscal replacement. Pakistan needs reliable fuel supplies and sustainable revenue. Neither objective justifies making ordinary citizens the permanent financiers of a state unwilling to reform itself.