Why fuel prices had to be raised

The government has raised fuel oil prices again. Diesel, octane, petrol, and kerosene prices have gone up by 20 taka per litre. Diesel now sells at 135 taka per litre. Octane and petrol sell at 160 taka per litre, while kerosene sells at 155 taka per litre.

The Ministry of Power, Energy and Mineral Resources issued the new prices in a notification last Sunday night. The new prices took effect after midnight. This marks the third fuel price hike in seven months since the elected government took office.

The first hike came on April 18. Diesel rose by 15 taka to 115 taka per litre. Octane rose to 140 taka, petrol to 135 taka, and kerosene to 130 taka at that time. A second hike followed a month and a half later on May 31. Diesel, octane, petrol, and kerosene each rose by five taka per litre.

The latest hike marks the steepest increase since 2022. That year, the Ukraine war pushed fuel prices up by a historic 42 percent. This time, the Iran war has driven repeated price increases. These increases will seriously affect the economy and public life.

Bangladesh depends heavily on foreign sources for fuel oil. The Bangladesh Petroleum Corporation reports annual fuel demand of 75 to 80 lakh tons. This year’s demand stands near 75 lakh tons. Diesel makes up 75 percent of this demand, while other fuels make up the remaining 25 percent.

Bangladesh’s dependence on foreign fuel makes it vulnerable during global disruptions. War or other crises abroad hit countries like Bangladesh the hardest. The Iran war has disrupted oil and gas transport since it began. This disruption has caused fuel shortages and price hikes worldwide.

International fuel prices and shipping costs have risen sharply since March due to the Iran war. Fuel prices have more than doubled under these conditions. The Bangladesh Petroleum Corporation reported losses of 22,876 crore taka between March and August. The Energy Division claims the new price hike will reduce losses by nearly 10,000 crore taka.

The price hike will reduce losses, but it will also affect nearly every part of life. Power plants run on oil, so electricity production costs will rise. Vehicles run on oil and carry passengers and goods, so transport fares will rise too. This will push up the prices of goods generally.

Factories also use oil as fuel for production, so manufacturing costs will rise. Oil powered irrigation pumps rank second only to electric pumps in usage. Rising irrigation costs will raise farming costs as well.

Inflation currently stands above eight to nine percent. Observers expect it to rise further after this hike. Consumers Association energy adviser Mr. M Shamsul Alam said the government raised power prices earlier and has now raised fuel prices. He said gas prices may rise next. He warned that survival will become very hard for people if this continues.

Truthfully, survival has already become nearly impossible for many people. Prices of rice, lentils, flour, oil, fish, meat, eggs, milk, vegetables, and spices have all moved beyond the reach of ordinary buyers. People’s incomes have not grown, while their expenses have risen sharply. Many families can only afford a quarter or half of what they actually need. Poverty and malnutrition have become the fate of many households. The number of poor people has already grown at an alarming rate, and signs suggest this number will keep rising.

Every government aims to make life easier and safer for its people. Sadly, the current government struggles on both fronts. Prices keep rising steadily. Public safety and law and order keep declining as well. People feel deep anxiety over both issues.

In fairness, the government had little choice but to raise fuel prices. Every country has raised fuel prices recently. Europe, America, Saudi Arabia, and the United Arab Emirates have all done so. Neighboring countries like India, Myanmar, Nepal, Sri Lanka, Thailand, and Pakistan have also raised their fuel prices.

Diesel costs 135 taka per litre in Kolkata, India. It costs 165 taka in Myanmar, 161 taka in Nepal, 179 taka in Sri Lanka, 151 taka in Thailand, and 185 taka in Pakistan. Fuel prices in neighboring countries now exceed those in Bangladesh. This gap raises the risk of fuel smuggling from Bangladesh into India and Myanmar. The price hike may help curb this smuggling risk as well.

The government cannot simply raise prices and consider its job done. It must also plan how to manage the price hike’s inevitable effects. It must take real action alongside the price hike. The government should promote fuel efficient use. It should reduce traffic congestion to cut fuel waste. Government agencies should show restraint in vehicle use to avoid extra fuel costs. Private citizens should also practice restraint where possible. Observers believe the country can overcome this situation if the right steps follow.