The prices of petrol and diesel are higher in Pakistan when compared with India in terms of their own currencies as on June 6, 2008, which is adding to the cost of production and giving the country tough time in global competition. The exchange rate of Indian Rupee was 39.74 viz-a-viz US dollar, whereas one dollar was equivalent to 71 Pak rupees in June, 2008.
Both the countries meet most of their demand of gasoline through imports and supply to the industrial and domestic consumers at subsidised rates in the face of regional competition. In India, the price of Petrol/litre is Rs 53.43 and Diesel/litre is Rs 36.80, whereas in Pakistan the per-litre prices are Rs 68.81 and Rs 49.05 respectively.
Pakistan and India both are developing economies but in Pakistan the pace of development has been hampered due to instability after 9/11 when it became the front line state in fight against terror. On the other hand, Indian economy grew unhindered and they are far ahead as compared to Pakistan in information technology and manufacturing.
For sustainable growth, Pakistan has to concentrate on the export-oriented industries and to stay in the global economy it has to diversify its exports. The main stay of Pakistan exports at present is textile industry, which contributes above 60 percent of the foreign exchange earnings. The textile industry is in desperate need of cheap energy mix as regional competitors like Bangladesh and India are giving tough time to the country in the global market.
Pakistan also needs to invest in the renewable energy sources to keep the wheel of its economy moving as with the sharp increase in petroleum products prices, it has become difficult to maintain cost of production at a reasonable level whether it is manufacturing or agriculture.
Both India and Pakistan are supplying subsidised diesel for the tube-wells to attract farmers to grow more to meet the increasing food demand with the increasing population.
The prices of food items are increasing world-wide and it is great opportunity for agrarian economies like Pakistan to take benefit of it and grow more for export after meeting domestic consumption.
Recent concern about gasoline prices underscores the link between energy and economy. Forecast of International Energy Agency (IEA) estimate that sustaining a 3.6 percent rate of annual growth in the global economy to 2030 will require 33 million barrels per day in global oil supplies ie an increase of 40 percent.
Economists like to say that it all boils down to supply and demand. But there are many factors affecting the tried-and-true laws of economics - and those factors have contributed to today's high-demand, tight-supply world energy market. For starters, demand is very strong, coming from mature economies like the United States and Europe plus the developing economies of countries like China and India and to some extent Pakistan. And as per capita income rises in those developing countries, the demand for energy is expected to continue growing.
Tight supplies have been aggravated by political instability, resource mismanagement and natural calamities. The Iraq insurgency, civil unrest in Nigeria and political uncertainty in Venezuela are among the examples. And hurricanes in the Gulf of Mexico have affected operations in both the United States and Mexico.
Finally, the decline in the value of the US dollar against other countries has put American consumers at a disadvantage. American consumers must now pay more for crude oil than countries with stronger currencies. The World demand oil has increased sharply in recent years rising from 77 million barrels per day in 2001 to 85 million barrels per day in 2007. The US energy information administration expects World oil consumption to grow by 1.2 million barrels a day in 2008 and by 1.3 million barrels a day in 2009.