The federal government has increased the petrol price by Rs25.58 per liter, effective immediately. A liter of petrol will now sell a little over Rs100 again.
The price of high speed diesel has been increased by Rs21.31, according to a notification issued by the Finance Division. The prices of kerosene and light diesel oil have gone up by Rs23.50 and Rs17.84, respectively.
The Oil and Gas Regulatory Authority proposes new rates in a summary to the government at the end of every month. But this time the government increased the prices on the recommendation of the Petroleum Division.
The government has cut local prices four times since March 1, resulting in an overall drop of Rs42.1 per litre from Rs116.56 to Rs74.5 per litre (official rates). It was able to do so after international crude oil prices crashed.
However, the government doubled petrol tax from Rs15 as of January to Rs30 now. The government charges sales tax on petrol at 17%, but it keeps changing the amount of the petroleum levy, which is its main tool to increase tax revenue from oil consumption or pass on any relief to the consumers. Presently you pay Rs41 on every liter of petrol, including sales tax.
The government determines local prices based on past prices of international oil. It calculates prices by keeping in view the rates at which crude oil was imported by the country. That means the petrol you consume today was imported in its raw form weeks earlier.
On June 22, this publication reported that petrol prices for July are likely to increase. This is because the price of international crude oil has also increased from $20 a barrel two months ago to more than $40 per barrel in June.