MULTI-DIMENSIONAL EFFECT OF OIL PRICING ON PAKISTAN ECONOMY: A CASE OF STUDY
Download| Volume 14 Issue 2 2018 | |
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| Author(s): |
Qamar Ul Arafeen
S.M Ahsan Rizvi
Muhammad Imran Hanif
Syed Nayyar Al
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| Abstract | Pakistan's economy is growing steadily. This growth demands higher energy consumption and consequently putting high pressure on the countries economy. Pakistan mainly depends upon oil and gas resources to fulfill energy requirements. Indigenous resources of Oil are not enough to quench the energy thirst of the growing economy. As a result, Pakistan has to import a large quantity of oil and oil-based products from Middle East countries. Gas reserves in the country are enough for current gas requirements. So natural gas is playing a key role in the power sector. Currently, in the oil upstream and the downstream sector, there are some local and international companies involved and the government of Pakistan is establishing such policies that it can attract more international investors in this sector but the rapid pace of change, a high degree of uncertainty and unstable political situation of the country present significant challenges and risk to foreign investment. The paper is a review of possible consequences and challenges presented by high oil prices in Pakistan. Pakistan is heavily dependent on imported fuels and this dependence is expected to increase even further in the future given the depleting gas resources. The rising oil prices in the international market has had affected negatively the balance of payment position as well as the budgetary position of the country and contributed to creating inflationary pressures in the economy. For long-run development, oil will remain an important source of energy. The government should chalk out strategies for ensuring use efficiency; and development, adequacy, and reliability of supply and the pricing of petroleum products in such a way that will not create an extra burden on the consumers. Unless appropriate steps are taken this trend of rising oil prices will further aggravate the negative impacts on the economy. |
| Keywords | Import Parity Price (IPP), Light Diesel Oil (LDO), Motor Spirit (MS), High Speed Diesel (HSD), Oil Marketing Companies (OMCs), Import Parity Price (IPP), Oil Companies Advisory Committee (OCAC), Oil and Gas Regulatory Authority (OGRA) |
| Year | 2018 |
| Volume | 14 |
| Issue | 2 |
| Type | Short Report |
| Recognized by | Higher Education Commission of Pakistan, HEC | Category | "Y" | Journal Name | IBT Journal of Business Studies | Publisher Name | ILMA University | Jel Classification | O5,R32, R48 | DOI | http://dx.doi.org/10.46745/ilma.jbs.2018.14.02.17 | ISSN no (E, Electronic) | 2409-6520 | ISSN no (P, Print) | 2416-8393 | Country | Pakistan | City | Karachi | Institution Type | University | Journal Type | Open Access | Type of Review | Double Blind Peer Reviewed | Format | Paper Link | http://ibtjbs.ilmauniversity.edu.pk/journal/jbs/14.2/17.pdf | Page | 209-220 | References | Ahmed, A., and M. J. Kumar (2008) Status of Petroleum Sector in Pakistan- A Review. oil & gas business. Akram, M., (2012) Do crude oil price changes affect economic growth of India, Pakistan and Bangladesh?: A multivariate time series analysis. Hogskolan Dalarna D class thesis. Chuku, A. C., E. L. Effiong and N. R. Sam (2010), “Oil Price Distortions and Their Short- and Long-Run Impacts on the Nigerian Economy”, MPRA Paper No. 24434, Available at http://mpra.ub.uni-muenchen.de/24434/ Colongni, A. and M. Manera (2008), “Oil Prices, Inflation and Interest Rates in a structural Cointegrated VAR Model for the G-7 Countries”, Energy Economics, Vol. 30, pp. 856-888. Abeysinghe, Tilak (2001) Estimation of Direct and Indirect Impact of Oil price on Growth, Economic Letters, Vol. 73, pp.147-153. Cunado, J. and Perez de Gracia (2005) Oil Prices. Economic Activity and Inflation: Evidence forSome Asian Countries, The Quarterly Review of Economics and Finance, Vol. 45, pp. 65-83. Dohner, R.S. (1981), “Energy Prices, Economic Activity and Inflation: Survey of Issues and Results”, in K.A Mork (eds), Energy Prices, Inflation and Economic Activity, Cambridge Mass: Ballinger. Abid, M., and M. Sabri (2012) Energy Concept-Economic Growth Nexus: Does the Level of Aggregation Matter?. International Journal of Energy Economic and Policy. Vol.2, Pp.55-62. Gisser, M. and T. H. Goodwin (1986), “Crude Oil and the Macroeconomy: Tests of Some Popular Notions”, Journal of Money Credit and Banking, Vol. 18, pp. 95-103. Levent, K. (2007) Testing Causal Relationship between Energy Consumption, Real Income and Prices: Evidence from Turkey. MPRA Paper No.21834. Jongwanich, J. and D. Park (2009), “Inflation in Developing Asia”, Journal of Asian Economics, Vol. 20, pp. 507-518. Kilian, L. (2010), “Oil Price Volatility: Origins and Effects”, World Trade Organization Staff Working Paper No. ERSD-2010-02. Langdon, D. Clough (2007), Energy Profile of Pakistan, Energy and Geography, Energy Information Administration, January 20, 2007, pp.1. (Pakistan Energy Yearbook (2008), Hydrocarbon Development Institute of Pakistan, Ministry of Petroleum and Natural Resources, Government of Pakistan.Oil and Gas Regulatory Authority (OGRA) (2008) Annual Report 2007-08. Oil and Gas Regulatory Authority, Islamabad, www.ogra.org.pk Lardic, S. and R. Mignon (2006), “The Impact of Oil Price on GDP in European Countries: An Empirical Investigation Based on Asymmetric Cointegration”, Energy Policy, Vol. 34, pp. 3910-3915. Lardic, S. and V. Mignon (2008), “Oil Prices and Economic Activity: An Asymmetric CointegrationApproach”, Energy Economics, Vol. 30, pp. 847–855. Muhammad. (2013). An econometrics Analysis of oil price Volatility . International Journal of economic and finance , pp1-4. Nadia, I. A. (2013). The impact of Oil Prices on stock and CPI in the Pakistan . IOSR journal, pp43-57. |