THE government’s move to daily petroleum price adjustments should make fuel pricing more transparent and more closely aligned with global market and exchange rate trends. Under the new system, Ogra will set prices daily, using Platts benchmark rates, and disclose all price components to improve transparency. The mechanism ensures that global price changes are passed on to consumers promptly, reducing delays and limiting political intervention. Introduced amid conflict-driven volatile global oil markets, the daily adjustments are expected to distribute the impact of global price hikes more gradually. Besides reducing the frequency and severity of price shocks, they can help make the pricing system more transparent and efficient, and discourage panic buying. Daily revisions can discourage hoarding and speculative inventory gains by petrol pump owners, while protecting them against inventory losses caused by sudden price changes. The new mechanism can reduce political discretion in fuel pricing by allowing market movements to determine retail prices. Thus the government will be less likely to delay increases for political reasons or delay reductions for fiscal considerations.

India has successfully revised petrol and diesel prices daily since June 2017, allowing smaller, frequent adjustments that reflect global oil prices and exchange rate movements, instead of resorting to abrupt changes. The pump owners’ opposition should not be allowed to derail the reform. While their concerns are understandable from a business perspective, the government must distinguish between legitimate commercial interests and profits generated by an opaque pricing system that burdens consumers. Under the previous weekly or fortnightly mechanism, dealers could anticipate price increases, build up cheaper inventories and benefit from the higher value of existing stocks once domestic prices were revised up. These speculative inventory gains arose from the lag between global price movements and government price adjustments, while consumers bore the higher replacement costs. Daily price revisions largely eliminate this pattern by aligning domestic prices more closely with global market trends. In a well-functioning market, pump owners should earn fair returns through regulated margins and efficient operations, not through windfall gains from pricing gaps. If dealer margins are inadequate, they should be reviewed based on actual costs. However, reverting to a system that enables speculative profits at consumers’ expense is no solution.

Published in Dawn, July 25th, 2026