How Fuel Price affect the Economy
An increase in fuel prices has affected not only those who have their own vehicle but also those who don’t own one. Rising fuel prices impact citizens’ lives because steep fuel prices lead to higher inflation. It affects the prices of other essential goods. The value of essential commodities like food, medicines, etc has been adversely affected by a rise in fuel prices.
The current situation in Papua New Guinea cities
Since the Russian Invasion of Ukraine, there has been a steep rise in petrol and diesel prices that have become a concern for the citizens. It has impacted their livelihood. The fuel prices have increased 3 times becoming dearer increase per liter. The petrol price in Port Moresby has reached K12 per liter and the same for the other part of Papua New Guinea.
The reason behind rising fuel prices
Due to the acceleration in the global crude oil demand and also due to the Conflict between Russia and Ukraine, there has been a rise in fuel prices. The Brent Crude Oil crossed $120.7 per. The main reason behind the rise in oil prices in countries like Papua New Guinea is the global situation. Taxes have proved to be the other reason for the surge in prices because Papua New Guinea levies highest taxes on petrol and diesel in the world.
What is ICC saying?
ICC said the significant increase in the domestic fuel price is a result of increased global oil prices. adding that many countries are also experiencing this significant increase in their domestic fuel price.
Is there a solution?
Experts believe there are two ways to deal with the rising fuel price crisis — either bring it under GST or a reduction in excise duty. However, the Marape Government and states are not keen on slashing respective taxes levied by them due to the high revenue they have generated amid the ongoing pandemic.
The duty levied by the Centre of petroleum products makes up almost 90 per cent of the total excise duty it collects. In comparison. While the central and state governments have depended on petroleum products for a long time to generate additional revenues, excise duty has started going up sharply since 2014 under Perter Onil Government.
PNG LNG?
PNG LNG has the capacity to produce more than 8.3 million tonnes of LNG, an increase of 20 percent from the original design specification of 6.9 million tonnes per annum (MTA). Over the life of the Project we estimate that the PNG LNG Project will produce more than 11 trillion cubic feet of LNG.
PNG has been exporting crude oil since the early 1990’s. Although production is modest and has relatively reduced overtime, it is one of the country’s major exports. In 2014, PNG launched the commercial operation of liquefied natural gas, boasting as the country’s top revenue-generating export product.
What is Marape Government doing do reduce the inflation of Fuel prince and basic Consumer goods.
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