As if the increasing prices for goods and services were not enough as inflation skyrockets while we continue our fight against Covid-19 in the country, last week rising fuel prices were added as another burden that is likely to hit many of us.
In Thimphu, the prices of petrol and diesel rose by more than Nu 10 and Nu 17 respectively. A liter of petrol started costing Nu 95.19 and diesel Nu 100.55 as of the morning of March 17, 2022.
One impact of the fuel price increase means that consumers will now have to pay a little more for the goods and services they buy, as the increase in fuel costs will eventually be passed on to consumers.
According to one analyst, the increased fuel prices, which have reached a record high, are being passed on as increased transportation costs to grocery stores and retailers, who in turn pass these costs on to consumers.
What is certain is that the increase in fuel prices will make transportation more expensive and, in turn, consumers’ goods more exorbitant. The reason why the increase in fuel prices is bad at this point in time is because inflation is already high and a higher inflation will burn everyone’s pockets and livelihoods even faster. People, especially those in the lower income brackets, will be hit the hardest.
Accordingly, there are also suggestions that the government should bear some of the increased fuel costs so that the general public can get through this difficult time.
Even the People’s Democratic Party (PDP) urged the government on March 19, 2022 to look into the Bhutan Economic Stabilization Fund (BESF) to further mitigate the price hike. The BESF, the PDP said, was established in 2017 with the aim of ensuring macroeconomic stability with a capital injection of Nu 100mn. Of the 15% revenue from hydropower projects paid to the government as annual royalties, 5% is allocated to the BESF.
It is also certain that there is no clear answer as to how we can decouple ourselves from the vagaries of fluctuating fuel prices in the region and globally. But if we do not want to find ourselves in a similar predicament again and again, year after year, the right thing to do is to reduce our dependence on imported fossil fuels.
To do this, our public transportation system should be improved so that those who want to buy a fuel-powered car need to understand that their purchase is a burden rather than a benefit. The promotion of electric vehicles, which is already done through subsidies, must be adopted for a large part of the population and on a larger scale.
While these are long-term answers to the problem, what we need now are immediate solutions that the government must come up with.