THE world has been going through an unprecedented time since the outbreak of coronavirus. The Covid-19 pandemic has particularly hit the international oil market hard and world oil prices have fallen sharply in response to plummeting demand.
However, the 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.
Since the government has now started easing lockdown measures to provide immediate relief to 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 thing could be to deregulate oil prices given the fact the state-controlled oil prices have both short and long-term devastating consequences for the oil-dependent economy like ours.
Deregulation will help address the supply chain issues and will smooth oil companies’ costs and profit margins. This could also help oil refineries to invest in further expansions and upgrades, and oil marketing companies would also be able to expand their storage capacity as well as retail networks to meet the growing energy needs of the country.
Published in Dawn, July 4th, 2020