Fuel crisis response is working, now policy must protect households

Reducing fuel use is only the first step; managing the cost impact on households is the real test.

In response to rising global fuel prices, Pakistan has introduced a range of adaptive measures including hybrid work arrangements, online classes, reduced office attendance, and free intra-city public transport to curb fuel consumption rather than absorb external price shocks. These are necessary short-term solutions. However, another next challenge is to manage the cost pressures that always come after the increase in fuel prices.

The recent increase in fuel prices has triggered far-reaching effects that extend well beyond the transport sector. This increase in fuel and diesel prices quickly transferred to the food prices, logistic prices and household budgets.

When transport costs rise, the cost of moving goods also goes up and ultimately consumers will also feel this burden. Without the targeted protection measures, this pass through effect of increase in fuel prices places a serious pressure in households with fixed incomes.

The main problem for today is not how to cut back on fuel usage, but rather how to prevent households from getting effect by inflation caused by rising fuel prices.

Currently, the main focus is to restrict mobility. The next step of policy development must be focused on protecting workers from losing purchasing power when their wages do not adjust with the rising cost of living.

In order to respond effectively, A practical policy response requires dividing support into clear income groups.

First, lower-income households require direct protection. This protection can be provided through a temporary rashan support program funded through the Benazir Income Support Program (BISP) specifically to those most vulnerable families that are affected by rising transport and food costs. Since BISP program already has a targeting system, it can be quickly deliver support without creating new systems. Fuel shocks should not cause food insecurity for already low income households.

Second, employees in lower government grades (BPS 1–16) and similar private sector workers who must attend offices daily should receive commuting support. Hybrid work reduces costs for desk-based employees, but support staff, clerical workers, and operational employees continue to face rising transport expenses. A temporary commuting allowance for mandatory attendance roles would ensure that fuel saving policies do not unfairly burden those who have no choice but to travel.

Third, fixed salary earners in both public and private sectors require relief to cope with rising living costs. Salaried employees cannot easily adjust their income when expenses rise. Temporary tax relief or cost adjustment measures for increased living costs won’t only allow workers to maintain purchasing power, but will also prevent middle income earners from becoming silent losers of fuel adjustment policies, without making these adjustments, many middle income earners will find themselves unable to afford basic necessities.

Fourth, policy should encourage the private sector to support national fuel saving efforts. Organizations that formally adopt hybrid work models and reduce employee commuting could be offered limited tax incentives. Countries such as the United Kingdom and Singapore have used such incentives to promote flexible work as part of productivity reform. Similar targeted incentives in Pakistan could reduce commuting demand while supporting output-based work practices.

These measures should be seen not as subsidies but as economic stability measures. The objective is not to control fuel prices, but to prevent rising costs from de stabilizing household finances and workplace productivity.

Pakistan has taken the right first step by reducing fuel demand. The next policy step must ensure that the burden of adjustment does not fall disproportionately on those with the least flexibility. Managing fuel shocks is not only about saving fuel it is about protecting workers, supporting productivity, and maintaining economic stability.

Copyright Business Recorder, 2026