Few years back, those who forecast that international oil would reach $100 a barrel were seen either as doomsayers or publicity-seekers but now some are predicting the price to go beyond $200 a barrel and they are taken deadly seriously.
The crude price, hovering above $145, is posing grave danger to the emerging countries and their economies. The oil which pushes the wheel of economies has now started hurting the very growth of almost all countries either developed or developing.
In the backdrop of increasing world oil prices pressure is continuously mounting on the oil producing countries, especially OPEC, to ramp-up oil production. Saudi Arabia, the largest oil producer, has increased oil output by 300'000 barrels per day but refused to make further increase which was expected from July.
However, despite these supply side measures, international crude oil price hike shows no sign of abatement. Like most other emerging economies, Pakistan faces the extreme test posed by sharply rising fuel prices, which is destabilizing the country's Balance of Payment position and exacerbating domestic inflationary pressures. This is jeopardizing Pakistan ’s growth momentum and affecting every household. Rising food & fuel imports are the major contributors towards the apparent economic growth slowdown.
Pakistan has suffered a huge trade deficit in the outgoing fiscal year mainly due to the import of oil at higher prices. The data shows that Pakistan 's trade deficit has risen to an all time high $20.745 billion during financial year 2007-08. The trade gap is 52.95 per cent higher than last years $13.563 billion.
High oil import costs continued to impact on deficit and rising oil prices are making things tougher for the new government on the balance of trade side. The trade deficit climbed to 12.3 per cent of GDP during 2007-08 from 9.4 per cent of last year.
The oil import bill for the outgoing financial year is estimated to have swelled to $12 billion, against $7 billion last year - an increase of 71.4 per cent. However, the import bill for industrial raw materials and machinery declined during 2007-08, which also saw industrial output declining by four per cent. Analyst predicted that oil import bill for the current fiscal year would be increased to above $14.9 billion. However, other factors like the movement in the PkR exchange rate, the size of the anticipated Saudi Credit Oil Facility will also have a significant bearing on the size of the oil bill in Fiscal year 2009.
Analysts predict that Pakistan will account for just around 1.54% of Asia Pacific regional oil demand by 2011 and would rise to around 29.04 million barrel per day. Assuming oil and gas liquids local production of no more than 63,000 barrel per day 2011. Consumption is forecast to increase by around 4% per annum to 2011. The import requirement would therefore be approximately 385,000 barrel per day by 2011.
Natural gas, indigenous alternate of oil fuel is also becoming more costlier than ever as government has recently increased its price by 31 percent. The Gas demand is set to rise to 49.4 billion cubic meter (bcm) by 2011 and its share of consumption is forecast to be 7.98%, with the country accounting for 9.42% of supply.
The multiplier impact of the high international and local oil prices and natural gas has not been fully passed on to the general consumers which eventually cause deadly repercussions, meaning worst of the crisis is in the making and will hit every household shortly.
Consumers, especially the poor segment of the society, are suffering due to bleak political and economic future of this country. On the economic front increasing inflation is hitting hard the very livelihood of poor. The essential food items deemed for survival are getting out of the hands of low and even middle income groups hence intensifying their miseries.
On the political front, inability or negligence of the coalition government to solve the major issues ranging from restoration of deposed judges to restoration of peace in northern parts of the country is leading to even more confusion. According to some analysts the grave political situation and indifferent attitude of rulers is leading the country to a situation where it would be portrayed as “failed state”.
