For decades, the cornerstone of Pakistan’s natural gas policy has been an unchallenged notion – the demand for natural gas is a one-way street. The price inelasticity of natural gas substantiates a system of heavy subsidies, resulting in an artificial economy around gas that is bound to collapse under its own weight.

The symptoms are all too familiar: depleting natural gas reserves, crippling circular debt, rampant gas theft, and an expensive reliance on imported LNG.

The empirical studies of the 1970s and 80s confirmed the old wisdom. Gas demand was profoundly inelastic. It made sense when gas was a new, abundant resource being rolled out to urban consumers.

But here is the policy paradox we face: the old notion is over. A clear trajectory, traced through decades of economic research, reveals a critical and overlooked truth – Pakistani consumers, from households to industries, have become price sensitive. Our policies, however, have not caught........

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