If oil prices were raised this week because the government’s debt position didn’t allow it to protect domestic consumers from international price trends any longer, as the prime minister himself explained, then it shouldn’t be too hard to correct course since Brent crude has now collapsed in the international market. Demand destruction in China, the world’s largest oil importer, along with fears that the UK lockdown could extend till the summer because of an out-of-control Covid variant there, not to mention signs of a third wave of the virus in many parts of Europe as well as the US, have forced a revision of the outlook for at least the next quarter. That’s why as late as Friday, the last trading day of the week, oil bulls cashed in their chips and, for all intents and purposes, accepted that the rally had stalled. In Pakistan, which also imports most of its oil, the prime minister is right to worry about the likely inflationary effect of putting a cap on home prices when the commodity is rising internationally; more so since the local currency was allowed to float and plunge significantly as expected. But he must also know that making oil, and hence petrol, diesel and furnace oil, more expensive also automatically fuels inflation by increasing input cost across the board. So it is a double-edged sword and the prime minister can often find his hands tied in such matters. That is why it is important for his team to have the foresight required to navigate international markets and identify building trends. Pakistan’s problem is made much worse because of the gas crisis that has also been deteriorating throughout the winter. Faced with less than expected local production and steeply rising LNG prices, the government has no choice but to use oil to produce power; something that will get the job done for the moment but look very ugly when it skews the annual import budget to the upside. In this way both rising input prices and uncertainty about immediate- and medium-term trends combine to play havoc with production plans and costs of the industry. The government’s compulsions are understandable. But since oil is now falling globally and we are net importers the government must now make sure it provides some relief to individuals and industry. *