The fuel prices affect directly the economy of everyone; this is only factor which affects irrespective of his economic condition; however, the low economy person will be affected more than the higher / stabled economy persons.
There is a large fluctuation seen in the prices of fuel in the international market but more fluctuation has been noted in the domestic fuel prices in Pakistan. We know since the attack of USA on Iraq, the war on terrorism has been converted into war for oil, and ever since the petrol price is not constant. Instead of correction for the root cause the people and critics are criticizing the after effects.
If we take a look at the international oil prices, we can see a constant increase in the price; take a look at the graph below. The oil prices graph trends upward; the price loses its stability at the start of 2005, which shows a distinct upwards increase in the graph. The graph is based on the data gathered from 2002 to 2008 of the oil price in the international market.
The main cause is the world political situation which has a direct effect on the oil prices, the Iranian foreign policy as well as American invasion in Iraq are the two main reason, also the stake holders policy not seem to be on the right path.
The Pakistani fuel price trends look a little more aggressive in nature, the graph trend shows a constant increase but at the last of graph we can see the severity of price increase.
The data for the above graph is given below; we can see this April, 2012 the Rs. 100 limit has finally crossed! There was a perception that how much the price will increase it can’t exceed Rs. 100, but this April this barrier has been crossed. The prices are still on the move!
The impact of fuel price increase directly hits the economy, the most prominent is the increase in transport rates, just after the fuel price increase the transporters increase their rates a series of protests will be announced if they are not allowed to do so, due to the increase in the transport rates the daily household products also increases as they also include transport charges in their costs, thus they also have to increase their costs as well. The food prices increase along with an increase in the agriculture and machinery stuff.
Another cause of fluctuation in the product price is the increase in the cost of electricity, the major fuel used in the generation of electricity is the furnace oil. Thus the increase in fuel also affects the per unit cost of the power generated, this is a chain reaction which also increase all the stuff prices involved power which is obviously almost everything!