Pakistan is expected to raise petrol and diesel prices by Rs13 and Rs14 per litre respectively, following a surge in global oil markets. The increase comes after a brief reduction of Rs1.97 per litre on July 4. The government has also doubled the carbon tax on petrol and diesel from Rs2.5 to Rs5 per litre, while cutting the petroleum levy to offset the impact. A new Petroleum Prices Stabilisation Fund has been created to manage future price swings. For readers tracking carbon pricing and fuel subsidy reform, this story shows how Pakistan is using a carbon tax alongside a stabilization fund to manage price volatility. The carbon tax increase is small but signals a policy direction. The real test will be whether the fund smooths prices without undermining the carbon price signal. This is a concrete example of how developing economies are blending climate policy with energy affordability concerns.
