The New Nation - Internet Edition

THE last reduction in fuel oil price was more symbolic than substantive. If it was really intended to pass benefits to users, then the cut in prices could be substantially deeper but that could, nonetheless, help keep government's subsidy on this score bearable. Bigger drop in prices could be a positive stimulus for the economy and relief for all categories of energy users. When the oil prices were last hiked the prevailing international price of oil per barrel was some $145. The price dipped to some $87 per barrel or by 60 per cent since then. But notwithstanding a 60 per cent average decline in the international price of oil, Bangladeshi consumers became the beneficiary of decrease by only 11 per cent.

Oil prices have recently dropped to nearly $40 a barrel from its peak price about ten months ago. The special assistant to the Chief Adviser on energy told newsmen some days ago that government is considering a decrease in price in the current month. But there was no surety in his statement. From past experiences, it might not be improper to think that this government will leave it for the next one to decide.

It is not expected that government should bear too big a burden of subsidies for selling oil at a cheaper price. But even a decrease in its price by some 50 per cent --now-- would mean that government would have to pay notably less in subsidies for oil compared to the amount of subsidies it was paying before. So, there is no reason for not immediately slashing down fuel oil prices to reasonable levels immediately.