Socio economic impacts of fuel price hike
The price of diesel and kerosene has been increased from Tk 80 to Tk 114 per litre. That is, the rate of increase in this price is about 42 percent. The price of petrol per liter has been increased from Tk 86 to Tk 130. Octane price increased from Tk 89 to Tk 135. That is, the rate of increase in the price of petrol and octane is more than 50 percent. The new price is effective at the consumer level from 12pm on Friday (August 6).
This is the second time in a short period of time that the price of fuel has increased in the country. Earlier on 3rd November 2021, the price of diesel and kerosene was increased from Tk 65 to Tk 80 per liter at the consumer level.
Energy resources are the most important element in the post-industrial world on which stands the commercial system of the whole world. Therefore, the increase in oil prices does not mean only the increase in oil prices. This means an increase in the price of everything in daily life, which will reduce the purchasing power of the people.
As a result of the increase in the price of fuel, the price of daily necessities including consumer goods will increase. As a result public suffering will increase. We all know that most of the public transport in the country especially buses, trucks, covered vans and boats are diesel powered. So the increase in diesel prices will again increase the fares of all types of public transport. Meanwhile, news of fare hikes in the transport sector as a result of rising fuel prices has made media headlines. After the price hike, the bus fare has been hiked by 40 paise per kilometer in long distance and 35 paise in urban areas. That is, long-distance bus fares are increasing by 27% and in Dhaka 26.5%.
Although the per capita income of the country is said to increase according to the government, not everyone's income actually increased. Bangladesh is now passing through the demographic dividend (number of working people aged 15-64) with a significant portion being students and another large portion (about 3.6 million) unemployed [source: International Labor Organization (ILO)].
Most of the students bring money from home and live in different cities and suburbs of the country. As a result of this price increase, their quality of life and even survival will become a matter of concern. On the other hand, the condition of the unemployed will become more deplorable. As a result, social unrest and depression will increase.
Not everyone is doing well even among job seekers. Many have more expenses than income. Many people's salary does not increase for a long time and some increase but the amount is negligible. These people are constantly in debt. That is, the impact of this new fuel price increase on the middle class of the country, which is already living a miserable life, will be very negative.
The condition of low-income people is even worse. There is no correlation of expenditure with their income. Due to the additional stress on food habit, the lack of nutrition is causing illness and medical malpractice.
On the other hand, the price of fuel oil has been declining for quite some time in the international market. According to news agency Reuters, crude oil benchmark Brent crude rose 80 cents to $94.92 a barrel on August 5, down 11 percent from the previous week. In addition, the price of West Texas Intermediate (WTI) in the United States increased by 47 cents to 89.01 dollars per barrel, which is eight percent less than the previous week.
Again, a look at the daily price basket of the Inter-Governmental Organization of Petroleum Exporting Countries (OPEC) suggests that the prices of fuel oil are also on a downward trend. Its price has been gradually decreasing since the beginning of this month (August). Last August 4, oil was sold in the OPEC market at 101.19 dollars, which is the lowest in a month. As per OPEC month since February 2022, the price has been increasing, although there is some ups and downs, the downward trend of the price is noticeable. Hence, this price hike order by the government is also questionable.
Already the upward trend of commodity prices is narrowing the purchasing power of people day by day. Many products are priced beyond the reach of people. New employment has not been created much compared to unemployment in the country.
All in all, the general public is worried about the second round of the government's decision to increase the fuel price in this situation. State decisions should be people friendly and welfare oriented. Therefore, the government needs to reconsider the price of fuel oil.
The writer is contributor