Abrupt fuel price hike
Tuesday, 13 May 2008

Bangladesh perspective

At a time when people are simply reeling under mismanagement in every field from steep prices of essentials and intolerable cost of living during the administration of the caretaker government, we do not understand how the Finance Adviser will tackle what he said social unrest due to hike in oil prices, as he warned weeks ago.  It is a harsh reality that oil price has hit the 126-dollar-a- barrel mark. That is why the prospect of triple-digit oil prices has redrawn the economic and political map of the world, challenging some old notions of power. Oil-rich nations are enjoying historic gains and opportunities, while major importers - including China, India and Bangladesh, home to a third of the world’s population - confront rising economic and social costs. A fuel price hike would deal a severe blow to both the marginal and big farmers, as the cost of crop production will rise further. The small farmers who produce crops for their own consumption will be hit hard. On the other hand, the teeming millions of rural people who mainly depend on kerosene as the source of fuel will also have the brunt of fuel price hike. In fact, the price hike of kerosene and diesel will directly hit about 80 percent of the people of the country. We think that the government should now shelve the decision of fuel price hike in view of the prevailing inflationary pressure and go for austerity measures to face the price hike of oil in the international markets. The fuel price adjustment should be done in a manner that would relatively affect only a small portion of the people. Some social protection measures have to be taken to save the low-income group of people from the impact. The Adviser himself told the UNESCAP meeting last month about the possibility of social discontent over the fuel oil price. The international community should come forward in helping Bangladesh face the increased pressure on the budget due to the price hike of fuel oil, food and fertilizer as well as increased import costs. The oil-surplus countries too can provide the net oil-importing countries like Bangladesh financial assistance from the extra-profit they made of the increased oil prices.

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