How can Pakistan afford to reduce Petroleum Product Prices?

Despite reducing petrol prices, the government is still meeting its obligations for the Levy on petroleum prices. It is possible for the government of Pakistan to reduce the price of petroleum products, even if it is facing financial difficulties. Same way Imran did by doing it for Rs 150 Per Litre just before he was ousted. Also, Shahbaz Sharif laid the foundation of the Sukkur-Hyderabad motorway worth Rs.300B just the day before yesterday. So the kitty may not be completely empty.

One way the current Government could do this is by subsidizing the cost of these products. This means that the government would pay a portion of the cost of the products, effectively reducing the price for consumers. The government could also choose to reduce the taxes on petroleum products, which would also lower the price for consumers.

Another option for the government could be to negotiate lower prices with suppliers, either by securing a better deal through negotiations or by finding alternative suppliers. The government could also consider increasing efficiency and reducing costs in its own operations, such as by streamlining processes or adopting more cost-effective technologies.

It’s worth noting that reducing the price of petroleum products can have both positive and negative effects on the economy. On the one hand, lower prices can provide relief to consumers and businesses, which can stimulate economic activity. On the other hand, if the government is subsidizing the cost of these products, it could put a strain on the government’s budget and potentially lead to other financial problems.

Petrol prices in Pakistan are currently more than 1.5 times higher than they were at this time last year. Even though the cost of purchasing petrol has decreased in the international market, the government of Pakistan is able to maintain its revenue from the petroleum levy because it can reduce the price of petrol without changing the levy. As a result, the government is able to afford this change. Do not forget it is the same government that plans to distribute 100,000 laptops unable to pay for a consignment of lentils at the port.

It is not the government that buys and sells petroleum, but rather various companies. If the government does not reduce the price, it will benefit the petroleum companies. The government only adds a petroleum levy as part of its commitment to the International Monetary Fund (IMF).

Related: How Petrol Prices Are Set?

No oil and gas reservoirs were discovered in the offshore drilling at Kekra

Both success and failure are normal parts of mineral exploration operations. It was disappointing that $100 million had been wasted on the offshore drilling at Kekra, where a joint venture of four oil exploration companies (ExxonMobil, ENI, Oil, and Gas Development Company, and Pakistan Petroleum Limited) failed to find oil and gas reserves after four months of drilling. While it was understandable to be disappointed by the outcome of this project, it was important to recognize that success and failure are a normal part of mineral exploration operations. In fact, the global success rate for such projects is generally between 30% and 40%. It was also worth noting that India found oil reserves on its 43rd attempt at an offshore well, Saudi Arabia found its first oil reserve on its 7th attempt, and Norway drilled 78 holes before hitting it big. The cost of extracting oil can vary significantly, with the cheapest being Saudi oil at under $10 per barrel and the most expensive being Russian oil at over $60 per barrel. Ultimately, it was important to keep in mind that it may not always be financially or environmentally beneficial to extract oil, and it was important to consider alternative energy sources.

How much does it cost to extract 1 barrel of oil?

The cost of extracting one barrel of oil can vary significantly depending on the location and type of oil being extracted. Some factors that can influence the cost of oil extraction include the depth of the oil reserve, the type of drilling equipment required, the accessibility of the site, and the local regulations and taxes. In general, the cost of extracting a barrel of oil can range from as little as a few dollars to over $100.

For example, the cost of extracting a barrel of oil from a traditional oil well can range from $10 to $30, while the cost of extracting a barrel of oil from a more complex operation, such as an offshore platform or tar sands, can be significantly higher. The cost of extracting a barrel of oil from an offshore platform can range from $40 to $70, while the cost of extracting a barrel of oil from tar sands can be upwards of $100 or more.

It’s also worth noting that the cost of extracting a barrel of oil can vary significantly depending on the region. For example, the cost of extracting a barrel of oil in countries with a stable political climate and abundant oil reserves, such as Saudi Arabia, can be significantly lower than in countries with more complex geopolitical situations or limited oil reserves, such as Russia.

At what price is it turns beneficial to extract oil from the ground?

The price at which it becomes financially beneficial to extract oil from the ground can vary significantly depending on a number of factors, including the cost of extraction, the price of oil, and the demand for oil.

In general, the price at which it becomes financially beneficial to extract oil from the ground is known as the “break-even price.” This is the price at which the revenue generated from selling the oil covers the cost of extracting it. If the price of oil is below the break-even price, it is not financially beneficial to extract the oil. If the price of oil is above the break-even price, it is financially beneficial to extract the oil.

There are a number of variables that can influence the break-even price for oil extraction, including the cost of labor, materials, and equipment, as well as the efficiency of the extraction process. For example, if the cost of extracting a barrel of oil is $50 and the price of oil is $60, the break-even price for the oil would be $50. This means that if the price of oil falls below $50, it would not be financially beneficial to extract the oil.

It’s important to note that the break-even price is just one factor to consider when deciding whether to extract oil. Other factors, such as environmental impacts and the availability of alternative energy sources, can also influence the decision to extract oil.

The price of crude oil had been reduced in the international market petrol. The price has been reduced from 113 dollars per barrel to 75 Dollars per barrel. With international fuel prices this down, they are still not doing enough. They have taken 7 months to reduce prices already saved up enough. Maybe they are saving for Nawaz Sharif’s entry since we had been hearing a 35 to 42 Rupees per litre discount.

Govt is charging a 50 Rs petroleum levy as per IMF. Only the basic price has been reduced. Not the tax or levy. So the government’s profit is still the same. So they can afford it.

The government could not increase the petroleum levy because it had already reached Rs.50/L as passed by the National Assembly during Miftah’s tenure. The only option left was to increase the sales tax, but the government decided to give relief and lower the public’s anger instead.

A Satirical Approach

Pakistan is short of dollars. I guess their policy is to print Pakistan Rupees. I borrow Rs 200K and buy a cow for Rs 80K and sell it for Rs 100 K I then return Rs 220K (interest included) and end up with cow dung. Now in KPK, we gonna use that poop to make “naswar” causing no major health issues. So the joke is on WHO. In Punjab, we burn “pathis” and improve Air Quality. In Sindh, that goes to Engro straight for a fertiliser that is sold with high-profit margins to Baluchistan. Some of the cow dung is smuggled to Afghanistan via Chamman in return for expensive cars that run in the DHAs.

Our policies should be independent of vote banks and should serve the long-term interests of the people. Government should take rational steps:

  • By imposing taxes on ultra-rich industrialists and landlords.
  • By conducting newer explorations.

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