Re: Pakistani stocks close at four-year high as inflation hits 33-month low
Good news, if we take the current price of Brent the cost of oil per liter is around 70 cents (and I am sure our government gets it much cheaper from the middle East) and the government is charging over 108 cents for that.
Re: Pakistani stocks close at four-year high as inflation hits 33-month low
Brent crude is priced in dollars per barrel. It has to be refined. In US refined gasoline sells at 3.90 per gallon. Or 3.9/3.84 or $1.01/lifer. At 95 Rs (Pak) per dollar that is about Rs 96 per literal. So Rs 102 per lifer dermal reasonable. I could be off by 1-2 rs on exchange rate - but close enuf
Re: Pakistani stocks close at four-year high as inflation hits 33-month low
So, all those people attacking govt now please explain this.
You do realize that the inflation rate prior to PPP coming in was below 10% to begin with? And soon after PPP came in, the inflation rate shot up to 25%? So now if it has 'magically' come down to a 33 month low, it cannot be considered an accomplishment. Its like increasing the price of oil by 10 rupees, and then claim credit for reducing prices when later the price is brought down by 2 rupees.
[QUOTE = sachaydino]
This is not the time for rhetoric, accept the fact or silence is golden.
[/quote]
No use misleading the public. Back in 2008, the price of crude oil touched a high of $147 and consistently remained above $100 for a very long time, whereas the price in Pakistan, even after PPPs 6 price increases in 5 months, did not go beyond Rs. 85 a liter, with the $US being around the same mark. And now when crude oil is down to well below $100, and brent around $110 (prices well below the all time high), prices in Pakistan are at an all time high of Rs. 103 per liter (even after your massive 5pc reduction).
It would be nice if the government was just honest about the numbers, rather than trying to give them a spin in order to make themselves look better.
Re: Pakistani stocks close at four-year high as inflation hits 33-month low
[quote="Southie"]
Brent crude is priced in dollars per barrel. It has to be refined. In US refined gasoline sells at 3.90 per gallon. Or 3.9/3.84 or $1.01/lifer. At 95 Rs (Pak) per dollar that is about Rs 96 per literal. So Rs 102 per lifer dermal reasonable. *
so what would be the cost of refining it? As far as I know refining costs are not that high, it's taxes which takes the price to where we see it. The government is minting billions from the customers.*
Re: Pakistani stocks close at four-year high as inflation hits 33-month low
ummmm… read ‘fact’ in red font. Silence is golden, indeed.
Also please someone tell Raja Rental to read at least SBP’s reports if nothing else.
Pakistan has lowest inflation rate in the region: PM Ashraf – The Express Tribune\
Pakistan Inflation Rate
India Inflation Rate
Bangladesh Inflation Rate
Sri Lanka Inflation Rate
Re: Pakistani stocks close at four-year high as inflation hits 33-month low
so what would be the cost of refining it? As far as I know refining costs are not that high, it's taxes which takes the price to where we see it. The government is minting billions from the customers.
I have forgotten how many gallons to a barrel. But the price I gave is for refined crude or gasoline in US - inclusive of tax. Which may be say 10%. So sine in Pak refined product cost is same I am deducing tax also 10%. I could be wrong.
Re: Pakistani stocks close at four-year high as inflation hits 33-month low
This news is from the previous hike that was made in petroleum prices in April:
Petrol soars by Rs8.02, diesel by Rs4.70 per litre - thenews.com.pk
With the increase, the government is likely to pocket Rs25 billion in the month of April in the form of heads of GST and petroleum levy, an FBR official revealed to The News. “On account of GST, the government will earn Rs18 billion and Rs7 billion because of the petroleum levy,” the official, speaking on condition of anonymity, said on Saturday. “Compared to the month of March, the government will have an additional Rs1.5 billion revenue as more GST will be collected because of a hike in POL prices — so much so that the government will earn Rs27 billion gas development surcharges in the month of April.”
Petroleum prices: Top officials given until Sept 27 to withdraw hike – The Express Tribune
**ISLAMABAD: **
A parliamentary panel warned on Tuesday of moving a privilege motion against finance and petroleum secretaries if oil prices were not reverted to the July 31 position.
If our recommendation to revert oil prices to the July 31 position is not implemented by September 27, we will submit privilege motions in parliament against finance and petroleum secretaries, said members of the Standing Committee on Petroleum and Natural Resources.
At its meeting on Tuesday, the panel resented the recent increase in petroleum prices, saying it was leading to inflationary burden and creating unrest and uncertainty among people.
It further said that the price hike meant the petroleum ministry had breached the privilege of the parliamentary panel.
Committee member Barjees Tahir said no one was taking into account the committee’s recommendations, and increases in oil prices were becoming a permanent feature.
Another member, Haider Ali Shah, said fuel prices in the international market were increased by $1 per barrel, while in Pakistan the government increased the prices by Re1 per litre and earned billion of rupees of profit through it.
He added that the government should revert to the monthly revision of oil prices, and taxes should be cut to provide relief to the consumers.
Senior legislator Sheikh Aftab said the committee should raise the issue with the federal cabinet.
Jamshed Dasti, another member of the committee, alleged that the petroleum ministry was involved in creating an artificial shortage of oil. “I may be hanged to death from the gate of the Parliament House if proved wrong,” he said.
“One meeting of the parliamentary panel costs Rs5 million; therefore, it is important that the committee’s recommendations be taken into account,” he added.
The committee decided to meet again on September 27 and directed the petroleum secretary to brief the committee on the implementation of its recommendations regarding petroleum prices.
Petroleum Secretary Dr Waqar Masood proposed formation of a subcommittee comprising technical experts to resolve the issue of oil price determination.
He said price determination should be according to changes in the international market.
“Petroleum levy and other taxes, including GST, have been imposed by parliament and following the directions of parliamentarians, the ECC approved this price determination formula,” the secretary added.
Pakistan Petroleum Limited has also made 41 billion Rupees during the past year.
Re: Pakistani stocks close at four-year high as inflation hits 33-month low
That's great, every positive thing, even a small thing, makes a big difference.
Re: Pakistani stocks close at four-year high as inflation hits 33-month low
Two things stand out
1) in April petrolnprice hiked by rs 8. That would be approx by 8%. No mention given of tax rate.
2) crude increased $1 per barre rs 100 per barrel.. Petrol rs 1 per lifer. Not sure any meaningfulnconclusion derivable.
We still don't know tax rate.
Also someone stated petrol dropped 108 to 102. So above hike reversed.
Re: Pakistani stocks close at four-year high as inflation hits 33-month low
You do realize that the inflation rate prior to PPP coming in was below 10% to begin with? And soon after PPP came in, the inflation rate shot up to 25%? So now if it has 'magically' come down to a 33 month low, it cannot be considered an accomplishment. Its like increasing the price of oil by 10 rupees, and then claim credit for reducing prices when later the price is brought down by 2 rupees.
Two things: 1) You do know that previous govt was keeping rupee vs dollar exchange rate artificially low. What the State Bank did was let the rupee float free to help exporters.
2) The govt cannot control price of oil. Its a commodity traded on the international market and price is set by international demand and supplies. What the GoP has been doing for many years was heavily subsidizing oil & which govt stopped subsidizing in 2007.
Re: Pakistani stocks close at four-year high as inflation hits 33-month low
^ and that is the responsible thing to do. Artificially keeping oil prices low does no one any favors in the long run.
Re: Pakistani stocks close at four-year high as inflation hits 33-month low
^^^ Yes, precisely my point. And average person does not understand economy and they think its all govts fault.
Re: Pakistani stocks close at four-year high as inflation hits 33-month low
^ there's no problem in removing the subsidy, but the government has put up massive taxes in addition, I have given a link above according to which the government would have earned 25 billion in the month of April alone. The parliamentary committee is also raising this. The government has made fuel as a big source of their revenues, not keeping in mind the effects that has on inflation.
Re: Pakistani stocks close at four-year high as inflation hits 33-month low
Daily Times - Leading News Resource of Pakistan
That oil prices have been increased again comes as no surprise. The $ 25 increase in international crude price since June — when weak international prices prompted a reduction in Pakistan also — was bound to factor its way into local prices, even though most of our imported oil is Gulf crude, and that too on favourable terms. Yet despite the predictability of the trend, there are some factors in the local price setting mechanism that need revisiting. First, Wednesday’s decision was forced by the finance ministry, despite the president’s directive to freeze prices till September 1, and resistance from other ministries. No doubt this is owed to bloating deficits and constraints on the petroleum levy, which was squeezing government revenue as prices rebounded in the international ma**rket. But since POL products comprise major inputs across industry, commerce and domestic use, the new price surge will add to already uncomfortable inflation, exposing the finance ministry’s position as self-defeating. Oil price rises impact already weak growth and employment, and eventually worsen the fiscal deficit. Granted, unimpressive tax and export earnings force the government to rely on oil revenues. But when this approach produces contradictory results, perhaps a change of tack is advisable.
**
Then there is the controversial decision of weekly revision of prices. Again the finance ministry forced its decision despite resistance from the Oil and Gas Regulatory Authority (OGRA). The exercise might seem attractive from the finance ministry’s point of view, especially when you consider an erratic international market, but loses value once you consider ground realities, and as such is difficult to understand. Consumers should prepare for more frequent hoarding by pumps (weekly instead of fortnightly) whenever prices move to the upside, not to mention lagging CNG price movement considering its 60 per cent peg to the oil price. This means frequent and erratic price movements in the local market. The government’s fiscal machinery’s aggressive stance exposes desperation, leading to tactics that stand to harm the economy in its current state. Yet little relief is expected at least till the elections. Islamabad must fill its kitty as much as possible, or risk severe repercussions when the $ 2.9 billion has to be repaid to the IMF this year.
**
The move also shows lack of cohesion between fiscal and monetary policy. Oil price rises will further deter investors already hurt by the energy crisis. It will also dilute, at least partially, recent expansionist easing by the State Bank. Already the 150 basis points cut will hurt the rupee’s standing, complicating long term oil imports in the process. To deter private investment at this time is inopportune, and will do the government’s obsession with the deficit little good. Pakistan’s oil price troubles epitomise one of the biggest concerns of dependent economies. The international price is set by geopolitical compulsions and demand-supply dynamics far beyond our control or influence. Yet oil is the economy’s driving force, and vulnerability to exogenous shocks should prompt greater revenue independence. Instead of concentrating on how to maximise oil receipts, economic managers ought to be working on enhancing value addition in exports and expanding the tax net. Only economies that perform at or close to their production potential are cushioned against external factors that blunt domestic growth. The energy crisis has debilitated production and consumerism alike, fuelling unemployment and cost-push inflation. Manufacturing industry is struggling, private investors are crowded out by excessive government borrowing, and the consumer is pushed into a very tight corner. Those in charge must revise policy and change course before even our minuscule growth is retarded and the economy begins contracting. ***
Re: Pakistani stocks close at four-year high as inflation hits 33-month low
^^^ Yes, precisely my point. And average person does not understand economy and they think its all govts fault.
Umm....average person knows a bit more than he is given credit for. I know there were subsidies in place, but do the math.
Before PPP, inflation was below 10%, and price of oil was around 60 rupees a liter after subsidies. PPP came in the early part of 2008. They immediately did away with subsidies, which is fine by me.
After that, oil shot up to $147 in the international market, as a result of which, the dollar/rupee rate went up to 80, and oil price in Pakistan (after removal of subsidies and factoring in the intl price increase) went up to 86 rupees a liter.
4 years later, intl oil price is $93 a barrel, and dollar/rupee rate is 95. And price of petrol in Pakistan is up by another 20 rupees.
Just to further clarify the oil price drama.........3 months ago oil price went up to 108 rupees a barrel.....and that was when international oil price was about $108 a barrel. Now the intl oil price is $93 a barrel, and in Pakistan, the oil price is Rs 103 or 104. I dont know who is doing the math at the PPP headquarters, but it certainly doesnt add up.
And regarding international oil prices......
1. Light sweet crude price is based on US standard.....not applicable to Pakistan. The above is just meant to highlight the variation in oil prices in Pakistan and internationally. There is a major disparity.
2. Brent Crude is based on european standard.......not applicable to Pakistan. Pakistan does not buy its oil on the open market. All governments have bilateral deals with their suppliers, which result in prices being different from the 'international market'.
3. Pakistan buys its oil from the mideast. Mideast oil grade is closer to the brent grade, but is not identical.
4. International prices vary largely based on how oil is transported from source to destination. Freight charges make a big difference. Pakistan is next door to the mideast, and our freight charges are not that high.
Point is, though the govt claims to change oil prices to reflect intl prices (which it is supposed to do anyway), it doesnt always do that on the downside. The rise is much steeper than the fall.
The most important factor that one can use to determine lower inflation/economic growth is job creation. If PPP govt can show any decent figures in the employment sector, then I can take them seriously. (PPP jiyalas stuffed into government sectors does not count as job- creation, that counts as organization-destruction. Look at PIA, and Railways)
Re: Pakistani stocks close at four-year high as inflation hits 33-month low
ummmm... read 'fact' in red font. Silence is golden, indeed.
As I already said this news is just like swallowing load of bricks and stones for you. It is a fact that once prices raised in Pakistan never came down. This government is atleast following the world trend.
Re: Pakistani stocks close at four-year high as inflation hits 33-month low
If you knew how oil prices are determined in Pakistan since 2002, you wouldn’t make such an ignorant comment. Anyways, if you want to give credit to the government to bring oil price down then let me remind you that during last two years, oil prices in Pakistan were increased more than 20 times. You should blame the government every time that happens as well.
Although haram khors like Mansoor Muzaffar and Khurram Rasool installed in oil and gas sector have been used as tools by the current government to make millions for themselves.
Re: Pakistani stocks close at four-year high as inflation hits 33-month low
How many times oil prices fluctuated in world market during the same period? Regarding haram khors, woh to pura Pakistan in se bhara howay hay, including your PTI which you also admitted in your interview. kis kis ko row-a- gay?
Re: Pakistani stocks close at four-year high as inflation hits 33-month low
[quote="Southie"]
Brent crude is priced in dollars per barrel. It has to be refined. In US refined gasoline sells at 3.90 per gallon. Or 3.9/3.84 or $1.01/lifer. At 95 Rs (Pak) per dollar that is about Rs 96 per literal. So Rs 102 per lifer dermal reasonable. *
32 gallons per barrel
Brent 92 $/ barrell
Or $2.9 per gal.
Refined gasoline 3.9/ gal
So mark up 1/2.9*100 = 36%
Brent 70 cents per lit
Petrol sold at 102 cents per lit
Mark up 32/70 = 46% in Pak.
So higher mark up in Pak but not by much*
Re: Pakistani stocks close at four-year high as inflation hits 33-month low
32 gallons per barrel Brent 92 $/ barrell Or $2.9 per gal. Refined gasoline 3.9/ gal
So mark up 1/2.9*100 = 36%
Brent 70 cents per lit Petrol sold at 102 cents per lit
Mark up 32/70 = 46% in Pak.
So higher mark up in Pak but not by much
We need to remember we dont buy Brent, we get oil from Gulf at much cheaper rates. At the moment the country is running on oil prices, as the government has failed to diversify and increase the tax collection.