This graph shows the price of Lanka Petrol 95 Octane compared to the global price of a barrel of crude. The price of crude is in dollars and the price of petrol is in rupees, but I was just looking at how connected the two lines are. As you can see, it’s a bit of a political lever, but the price of fuel is basically connected to the price of global oil. Sri Lanka is in a bad position because of the United States’ dumb embargo on Iran which they have to get everyone else involved in, but beyond that we basically following the global market.
|Date||Petrol 92||Petrol 95||Auto Diesel||Super Diesel||Kerosene|
|Jan 22, 2015||Rs. 117||Rs. 128||Rs. 95||Rs. 110||Rs. 65|
|Dec 5, 2014||Rs. 150||Rs. 158||Rs. 111||Rs. 133||Rs. 81|
|Sept 17, 2014||Rs. 157||Rs. 165||Rs. 118||Rs. 140||Rs. 86|
While Mahinda has politically reduced fuel prices before the Uva election and the Presidential election (September and December 2014), he could only really ride the global price wave. In the same way, this reduction, while politically timed, is also just reflected a global drop (plummet really) in crude oil prices.
In many ways this price drop has more to do with shale oil production in the US and whatever the Saudis are thinking than with local Sri Lankan politics.
In other news, I think a better policy overall is if the government drops taxes on electric cars to zero and reduces them on hybrid cars. Given Sri Lanka’s size we could easily cover the island with fast recharging stations and the tax burden on cars is already so high (over 100% sometimes) that these incentives could see us converting to a mostly electric/hybrid fleet in a decade. But that’s another story, as is building a modern electrical grid to match.