Oil price happily going down

The price of a barrel of crude on October 26 was $59.56 -- a drop of over $10 a barrel since prices in Bangladesh were raised -- and experts estimate that the price will continue to drop further to the region of $56 per barrel. It should be borne in mind that all estimates about the needs of BPC were made based on a calculation of crude oil at $70 a barrel, and at the current rates BPC is looking at an expenditure cut of Tk 766 crore a year.

Energy Adviser Mahmudur Rahman has said that if crude oil goes to below $50 a barrel, he will make the case for reduction of fuel prices. Nothing would be more welcome. No Bangladesh government has ever lowered fuel prices after raising them, and the government would do well to set a precedent of harmonising fuel prices with international market conditions.

Tap here to add The Daily Star as a trusted source

With respect to the Energy Adviser's argument that a cut in rates for diesel and kerosene would be more likely, we have an observation. We agree that lowering the price of these two fuels is top priority due to the needs of farmers and the poor, but we also do not see why the price of petrol and octane cannot come down too. If revenue is a problem, then the government should think of raising more revenue by collecting taxes, and not using what amounts to a backdoor tax on consumers.

A second observation is that if the intent is to relieve pressure on BPC, then the government should think of bringing down or eliminating the excise duty that has to be paid on the crude oil import. This strikes us as a better step then continuing to charge consumers an exorbitant rate at the pump.